How Uber Lost $5.5 billion on 4 SPAC & IPO Stocks: Grab, Didi, Aurora, Zomato. How it Got There, How They Imploded

It’s funny, almost.

By Wolf Richter for WOLF STREET.

This morning, Uber reported a net loss of $5.93 billion for Q1, and its shares initially tanked 11%, no biggie compared to the 32% dive that Lyft shares are currently undergoing following its earnings report and outlook last night.

In its earnings report, Uber disclosed $5.5 billion in losses on its stakes in four companies that recently went public via SPAC or IPO, and whose shares have gotten outright thackamuffled. These are the losses Uber reported today on its holdings of these four now infamous stocks that have been beautifying my column, Imploded Stocks:

  • Grab: $1.9 billion loss (biggest SPAC deal ever)
  • Aurora Innovation: $1.7 billion loss
  • Didi: $1.4 billion loss (biggest listing mess ever)
  • Zomato: $462 million loss.

Uber ended up with shares of Grab, the SoftBank-backed ride-hailing and delivery app in Southeast Asia, when Uber sold its own rideshare and delivery businesses in Southeast Asia to Grab. The deal was announced in March 2018, when both companies were still privately owned. In exchange, Uber got a 27.5% stake in Grab.

“The deal starts to make sense when you consider that both companies share common investors – SoftBank and Didi – and that waging an expensive subsidies war in what is currently a loss-making hurts both sides,” Tech Crunch said at the time.

Grab, headquartered in Singapore, went public via merger with a SPAC in the US. The deal was announced in April 2021 and was approved by SPAC shareholders on November 30, 2021. The deal valued Grab at $40 billion, the biggest SPAC deal ever.

On March 3, 2022, Grab reported that it lost $1.06 billion in Q4, and $3.45 billion for the whole year 2021, on top of the $2.61 billion it had lost in 2020, bringing the total loss for two years to $6.1 billion.

Grab shares [GRAB] have collapsed by 82% from their high in November 2021, just before the SPAC merger was finalized (data via Investing.com):

Uber ended up with shares of Aurora Innovation when Uber sold its own misbegotten self-driving unit, Advanced Technologies Group, to a startup, Aurora Innovation in return for a 26% state in Aurora. The startup was backed by Hyundai, Amazon, and a number of VC firms, including Greylock and Sequoia. At the time, the startup was valued at $10 billion, a person familiar with the terms of the deal told CNBC to generate hype.

Aurora Innovation went public via merger with a SPAC in November 2021. After the SPAC deal was announced, shares spiked to $17.77 on November 19 and have since collapsed. Today, shares trade at $4.00, down 77% from the November high (data via YCharts):

Uber ended up with shares of Didi, the Chinese ride-hailing and delivery startup, when Uber sold its Chinese business to Didi in 2016, in exchange for a 12% stake in Didi, making it the second largest shareholder, behind SoftBank.

Didi went public via IPO in the US at the end of June 2021, despite objections of Chinese authorities. As soon as the ADR started trading on the NYSE, it spiked and hit $18.01, before the collapse began. The threat of having to delist the ADR has hung over the ADR from the beginning. In March this year, Didi’s Hong Kong listing got scuttled.

Didi now disclosed that it has been investigated by the SEC about its IPO. “We cannot predict the timing, outcome or consequences of such an investigation,” it said. OK. Its shares may be suspended in addition to getting delisted. So good luck.

For Goldman Sachs, the lead underwriter in the IPO, the IPO was a masterful creature designed to generate fees and wipe out investors.

The ADR [DIDI] currently trades at $1.96, down, down 89% from the peak on July 1, right after the IPO (data via YCharts):

Uber ended up with shares of Zomato, a food delivery startup in India, when Uber sold its food delivery business in India to Zomato in March 2020. In July 2021, Zomato went public at 76 rupees a share, and its shares [ZOMT] started trading on the NSE in India. The shares surged initially and on November 14 hit a high of 160 rupees, and then spiraled down. Today, the shares dropped another 7.3%, to a new low of 64.45 rupees, down 60% from the November high.

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  77 comments for “How Uber Lost $5.5 billion on 4 SPAC & IPO Stocks: Grab, Didi, Aurora, Zomato. How it Got There, How They Imploded

  1. SilentC says:

    Was labor market tightening a big piece of the problem for these names? I heard people talking about how much money Uber, Lyft, etc. would make and no one ever talked about what would happen if there was global inflation and a labor shortage before we got to fully autonomous vehicles and delivery.

    • SilentC says:

      I have to partially RTGDFLA myself (Last Article) there is a line in there about driver incentives impacting Lyft. I imagine that is universal.

      • Harrold says:

        Gasoline prices are probably having a huge impact as well.

        • c1ue says:

          Gasoline prices affect the drivers, but don’t affect the ride share companies directly.

    • Augustus Frost says:

      The business model (if you can even call it that) sucked before the pandemic.

      • Nacho Bigly Libre says:

        Question to all the savvy investors who saw this coming: how many millions did you make by shorting these stocks?

        Or is it just an ego rush thing of saying I told ya so?

        • SilentC says:

          I don’t know if I’m savvy but I made a lot of money owning things like GOOG that had earnings and cash flow and avoiding companies like Uber. I think that probably counts. My guess is most people who visit this blog did the same.

        • BaronVonPickle says:

          I bought one put in RobinHood when it hit 60. Doubled my money. Made a cool 200 bucks. Does that help?

        • Nacho Bigly Libre says:

          Of course not. You only bought a lottery ticket. No skin in the game.

          Being right on paper doesn’t count. Risking your hard earned money on your conviction does. I don’t see anyone in this forum claim doing that.

  2. ru82 says:

    J Powell said it looks like inflation has peaked and has maybe been dropping just a little bit the past two months. Jawboning looks like it was working?

    He said consumers are in good shape and so are companies. Looking at a softish landing.

    BTW. My house has increase 10% since January. Thanks J-P

    • Leo1992 says:

      From Jan to April: Inflation up 1%, Fed rate up only 0.75%. Inflation already beating Fed!

      Fed can’t raise rates faster because it has to protect unicorns like Uber from becoming tax payer liability! As you can see from this article, there is no estimate of crap that these unicorns are carrying on their balance sheet.

      Fed balance sheet reduction of 100 Billion per month will only dissolve Reverse repo liquidity in 18 months.

      So EXPECT INFLATION TO KEEP RISING.

      • intosh says:

        When JP said they are trying to cool the economy without causing a recession, I guess by “recession”, he meant letting the crap out of the assets and stocks bubble too fast?

        He also said it was going to be “very challenging” to accomplish this. He seems to acknowledge the enormous pressure the crap is exerting inside the bubble.

        • Wolf Richter says:

          “recession” means quarter-over-quarter declines in GDP for a couple of quarters in a row, accompanied by decline in employment and other factors. NBER calls out recessions.

          Stock market and housing market declines are not a “recession” though they can, if they’re steep enough and long enough, eventually contribute to one.

        • intosh says:

          @Wolf

          Right.

          My comment was an attempted at a tongue-in-cheek way to say JP is lying, using the R-word as a cover while his real worry is the big mass of crap in the assets bubbles.

          Maybe I’m wrong but how easy is it to accidentally turn a white-hot economy that’s been driving up inflation to highest level in a generation to one in recession?

    • CrazyDoc says:

      Stocks are off to the races as well.

      • Einhal says:

        Of course they are. Powell as much as it said that he’s not going to do anything drastic to get inflation under control if it will upset the housing and stock market. He did lie and say he thinks they’ll have a soft landing, but a soft landing is not possible. Either inflation gets under control, or asset prices drop. He said today he’s not willing to tolerate the latter, so inflation will continue unabated.

        • Harvey Mushman says:

          50 basis points increase, twice the amount of the last hike in March. I would say we are heading in the right direction.
          The glass is half full.

        • CCCB says:

          Powell and the FED have nothing to do with this.

          These are permanent money losers that were overbid by amateur investors and sold by Wall Street, who cleaned up on IPO fees and probably derivative side bets too.

          The bloodshed isn’t anywhere near over yet either.

        • Depth Charge says:

          “…he’s not going to do anything drastic to get inflation under control if it will upset the housing and stock market.”

          He just raised by half a percent and he’s going to do it again at the next meeting. Mortgage rates have doubled since last August, and these rate hikes are only sending them higher. In what world is this not absolutely destroying the housing market? You people are funny. Weimar Boy just took housing speculators out back and shot them to death.

        • Einhal says:

          Depth Charge:

          Then why did the market skyrocket? The computers and high frequency traders clearly are programmed to ignore what he says and to only follow what he does. If he really wanted to let the air out of the housing market, he would have raised it to 5% today, not by .5%

        • Wolf Richter says:

          Nah. Last time, markets rose on the day when the Fed raised rates, and PLUNGED the next day when it sank in what the Fed did.

    • John Apostolatos says:

      “Inflation is much too high and we understand the hardship it is causing and we are moving expeditiously to bring it back down,” Chair Jerome Powell said after the decision in his first in-person press conference since the pandemic began. He added that there was “a broad sense on the committee that additional 50 basis-point increases should be on the table for the next couple of meetings.”

      I am not sure how this is seen as dovish. We will be at 2.5% in not time, the same level as in 2018 when everything went down.

    • unamused says:

      “Market is taking off because JP said inflation looks like it has peaked and may have dropped a bit the past two months.”

      JP appears to be talking out of both sides of his mouth. He also mentioned a couple of drivers of inflation – the ongoing conquest of eastern Europe and Chinese lockdowns – without mentioning numerous others, pretty much across the board, none which are anywhere near resolution.

      That The Fed is reducing its own contribution to inflation seems unlikely to help much, if at all, and anecdotal evidence suggests inflation is still accelerating. With a couple of strategic redefinitions of inflation we may never know.

      • Phoenix_Ikki says:

        Imagine me as the comic book guy from The Simpson saying this..

        “Worst FED chairman ever…”

    • Wolf Richter says:

      “He said consumers are in good shape and so are companies.”

      He has been saying that. He means that the Fed can raise interest rates without problems and without causing credit havoc among consumers and companies. This is his response to people saying that the Fed is trapped and cannot raise rates. He is saying, yes we can.

    • Augustus Frost says:

      Ability to borrow is firstly a function of lending standards, not rates. FRB has some influence over bank credit standards where it is primary regulator but doesn’t control it directly.

      FRB has no control over anyone else’s credit standards, unless it is going to buy this debt or lend to these borrowers directly.

      By the way, corporate balance sheets of public companies totally suck. The debt coverage ratio is low (for now) due to the bond mania.

      Corporate balance sheets were also in “good shape” in 2007 and early 2008, before the GC. Then the credit markets froze up and many of these companies nearly went bust or did.

    • Flea says:

      Inflation is down because China is closed

  3. phleep says:

    Some firms that got sprawled across different jurisdictions found themselves stretched on the rack of pain. Globalization shifted into reverse.

    But stock markets today seem to think we are in the clear. It is spring! Time to dance in the sunshine again! Dopamine addicts.

  4. Tim R says:

    Any idea what the combined total “profit” of Lyft + Uber?

  5. Flea says:

    We’re being sold on a ponzu scheme,rates go up market throws a party .Follow the leader again up then down GOD people are stupid

  6. polistra says:

    Beautifully written article, using a musical technique. Take the same paragraph and replace the names and countries a dozen times. The moral of the story is in the repetition: Uber is stripping off all of its assets as fast as possible.

    Ravel’s Bolero transposed into stock charts. The end is KAPLOOSH!

  7. Jackson Y says:

    What do you think is the reason we keep getting such explosive rallies after FOMC decisions?

    Given that every policy decision is announced well in advance to avoid “surprising the markets,” in theory efficient markets would price this in, leading to minimal post-FOMC market movement. But that’s not what we’re seeing.

    • Wolf Richter says:

      Typical bear-market rallies powered by short-covering. Only in a bear market!

      • Einhal says:

        I think you’re being a bit charitable. Every meeting, someone floats a rumor that they might be considering something even more drastic, then he announces that they aren’t, and the market skyrockets. It almost seems rehearsed.

        Anyway, CNN published an article saying “Powell rules out .75% hikes, stocks surge.” The mainstream media now is making it sound as though Powell cares only about the stock market. Let’s see how that goes over politically.

        • Wolf Richter says:

          Yes, agreed. There’s that too, “not as bad as someone (who?) feared”

        • Einhal says:

          Right, it almost seems like a trap to get retail investors back in. Who knows? All I know is the big boys can move the market with their algos. None of us stand a chance.

      • Phoenix_Ikki says:

        No Wolf, it’s the powerful but sometimes lazy PPT…they probably woke up from their drunken slumber last 2 days and made up for lost time

      • Educated but Poor Millennial says:

        Great answer,👍

      • BeeKeeper says:

        In technical terms, try to see BAR CHARTS, most of the days they have WICKS.

        WICKS are mostly created at the start/end of periods. This was most likely monthly upper wick. Now you might see slow or fast decline in bar for the whole month, and at the end of month there possibly will be pull back up again that will create lower WICK.

        It repeats itself every month, day, pick a period.

    • Augustus Frost says:

      The Efficient Market Hypothesis is total garbage. That’s oine reason. It’s more academic claptrap.

      • Ogre Magnarock says:

        So is rational expectations theory.

      • unamused says:

        For the most part. And yet, it is practically impossible to beat the market, as EMF says, but that seems more of a puerile observation than a solid basis for the hypothesis, weak or strong.

        A valid hypothesis should have predictive value, so if EMF were valid it should be useful in beating the market, thus contradicting the hypothesis. It should not be so easy to punch gaping holes in a valid hypothesis, which suggests EMF isn’t one.

        Good market models are hard to come by, and EMF isn’t really one of them. They’re mostly good for explaining what did happen and not very useful for predicting what will happen. I had a great deal of fun chasing tautologies and empiricisms around when I was a student, but that was a total waste of time because it distracted me from my true and honorable mission, coping with destitution and flirting with coeds.

        “Mr. Natural! What does it all mean??”
        “Don’t mean sheeit . . .”

        I can also utterly disprove the Merton-Black-Scholes hypothesis, on which the options markets are based. Attempts to publish the disproof back in the day resulted in my being widely despised by financiers, very much to my credit, I think. It’s only validity is as a mathematical tautology with no positive result, turning negative when you factor in transaction costs. But that is another story and shall be told another time.

        • 91B20 1stCav (AUS) says:

          una-so the only real way forward is to figure out how to get oneself reliably paid as a Monday a.m. QB…

          may we all find a better day.

  8. andy says:

    That face ripping rally I mentioned yesterday. There it is. In the face of the rate hike no less.

    • Harvey Mushman says:

      It’s much better outcome than if the market had dropped today.

    • Anthony A. says:

      Love it. I was out today and missed unloading the last of my equities except for the oils. Hope the rally continues thru the week and my puts expire worthless too. This is so good….thank you JP!

      • andy says:

        Hope it goes much higher. Need to reload my position. Many puts I sold end of last week are half-price now.

  9. Putter says:

    Market was severely oversold. This is a vicious bear market rally. Great shorting opportunity soon.

    • John Apostolatos says:

      I wonder how much was due to short covering and how much due to thin volume. A lot of shorts got burnt when they raised in March.

  10. DB Cooper says:

    As you so aptly chronicled previously there are a number of cos that seemingly were created to never produce a profit. GOOBER (publicly known and traded as UBER) is one of many cos. you identified that exist (10 plus years and counting) seemingly to bleed red ink….

    WOLF STREET 2020:

    “It’s astounding that investors don’t throw in the towel on a company (UBER) that is over 10 years old and has many thousands of employees but still loses nearly $3 billion on $3.5 billion in revenues.

    In Q1 2019, its last pre-IPO quarter, Uber lost $1 billion on $3.1 billion in revenues, according to its earnings report today. In Q1 2020, it lost $3 billion on $3.5 billion in revenues. This is not a propitious trend.

    • Marcus Aurelius says:

      Where do they get all this money to lose?

      (Especially considering UBER is one of many companies that are losing money constantly.)

  11. JWB says:

    Oopsiespalooza?

  12. Phoenix_Ikki says:

    As a regular joe, all I am asking for is 0.001% of Uber’s loss to completely transform my life and buy that overpriced big house that I need to raise my family in..

    .001% is so small it’s not even a rounding error yet we would rather see the whole thing go to money heaven..

    • JJ says:

      Totally relate to where you’re coming from. I try to diligently save money by cutting personal expenses to the bone in so many different ways.
      Seeing these losses of $1.7 billion, $1.4 billion, $400 million just nauseates me, especially when I’m willing to go the extra mile to save just a few bucks even at the lowly grocery store.

  13. Dan Romig says:

    When I read those succinct words:
    “For Goldman Sachs, the lead underwriter in the IPO, the IPO was a masterful creature designed to generate fees and wipe out investors.” an image was instantly conjured up as I thought about this statement.

    What other profession is there, I would ask, where one gets paid to kill a target? Which is what Goldman Sachs does so well; generate fees & wipe out targets. The targets being investors.

    “Well, the fact is, what I do is not a bad occupation. Someone is always willing to pay.

    Oh, no — it’s quite restful. It’s almost peaceful. No need to believe in either side, or any side. There is no cause. There’s only yourself. The belief is in your own precision.” -Joubert to Turner

    Calm, cool and detached is how world class cyclists ride when the end of the race is near and it’s time to kill off the opponents with an attack.

    Goldman sells these IPOs in the same precise manner.

    • Brent says:

      “What other profession is there, I would ask, where one gets paid to kill a target?”

      Quite a few I might say…

      Department of the Army:
      The Targeting Process (FM 3-60 / FM 6-20-10)

      Also our beloved IRS does not choose targets at random.Homeless person with no assets and lawyered-up billionaire with all his assets offshore are not good targets 😀

      Internal Revenue Manual chapter “Examination” includes targeting matrix pilfered from FM 6-20-10, axis 0X being taxpayer’s assets and axis 0Y reflecting taxpayer’s willingnes to co-operate.

    • Sit23 says:

      The Westpac bank chief executive in Australia said that sometimes the staff have to promote bank products to customers that are not in the customers’ best interests. Sounds like Gold in Sachs’ motto.

  14. Propheticus says:

    Those inverse ETF’s got “thackamuffled” today.

  15. SpencerG says:

    Amazing. I wonder how it is that Uber’s crack team can make the same exact mistake over and over again. Don’t their investors have any say in this?

    • Harvey Mushman says:

      “make the same mistake over and over again”

      Hey they stole a page out of my playbook!

  16. Mak says:

    Hubert Horan has written 28 articles in the last 6 years about the farce that is Uber and its ability to burn money. They have been published on Naked Capitalism blog but can also be found at the bottom of the page here:

  17. drifterprof says:

    Grab motorcycle food delivery people swarm dominantly at busy intersections here in Thailand. But they have competition, including Panda, Shopee, Lineman, etc.

    I don’t like food delivered from restaurants, even a good quality restaurant. For me, a significant part of the enjoyment eating restaurant food is the visual presentation and social milieu. It’s not so enjoyable to open up cardboard / plastic containers which food has been isolated and / or slopping around in.

    A year or so ago it seemed like Grab taxis were not quite the good deal as they used to be. It seems like standard airport taxis competitively reduced their fares to be more reasonable, so we take them now when transiting from airport to home.

  18. SocalJimObjects says:

    Tomorrow all will be forgotten. Short squeeze on. Uber to 100 and beyond!!!

  19. c1ue says:

    I don’t use Uber/Lyft except when traveling.
    Some odd behavior: I would get dramatically lower prices on Uber after going to the Lyft app.
    For example: due to a flight cancellation, I returned a rental car and then needed to return to the hotel. I had gotten a <$8.00 ride the previous day when picking up the car, but Uber quoted $26+. I went to Lyft which quoted <$12 and called a car – but Uber quoted me <$8.00 when I looked afterwards. This happened 3 times during this trip, and I took advantage of it twice including the ensuring trip to the airport for the alternate flight.
    I wonder if they are doing some "surge" pricing…

    • Hardigatti says:

      Not odd at all. The apps/web sites are watching your every move. Sometimes it works to your favor.

    • Nathan Dumbrowski says:

      Try the same price comparison with Amazon and Walmart. View an item and add to your cart then browse to the competition and notice the likely reduction in prices. Learned that from Wolf here on Wolf Street

  20. JJ says:

    I know this post is off-topic to Uber & Lyft, but given the fast pace of financial markets these past two days, it seems warranted.
    10-yr is now suddenly knocking at 3.1% after a headfake drop yesterday.
    I think the bond vigilantes are waking up and starting to send a clear message to JPow and the gang.

    • JJ says:

      I forgot to add that these bond vigilantes, if they are indeed waking up, were likely responding to the SLOW pace of QT as well. Delay the start a whole month? And then only in graduated steps towards $95b/month?
      It looks increasingly clear the Fed could lose control of the bond market, as Bill Fleckenstein has often commented on.

  21. unamused says:

    At this rate, Uber will be Unter in no time.

  22. Jacob_M says:

    I’m starting to think that Softbank may not be very good at this “Venture Capital” thing – At least not if the purpose is to make money via a positive return on invested capital.

  23. Scott says:

    I wouldn’t be surprised if the execs at Uber stil get lofty bonuses this year despite the foolish investment losses.

Comments are closed.