How Uber Lost $5.5 Billion on 4 SPAC and IPO Stocks: Grab, Didi, Aurora, Zomato. How it got there, how they imploded

Funny, almost.

By Wolf Richter for WOLF STREET.

Earlier this morning, Uber reported a $5.93 billion net loss for the first quarter, and its shares initially fell 11%, not a big deal compared to the 32% plunge Lyft shares are currently taking after the earnings report and Go through outlook last night.

In its earnings report, Uber announced $5.5 billion in losses from its stakes in four companies that recently went public via SPAC or IPO, and whose shares have plummeted. Here are the losses Uber reported today on its holdings of these four now-infamous stocks that embellished my Imploded Stocks column:

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

Uber landed with shares of Grab, the SoftBank-powered ridesharing and delivery app in Southeast Asia when Uber sold its own ridesharing and delivery businesses in Southeast Asia to Grab. The deal was announced in March 2018 when both companies were still privately held. In exchange, Uber received a 27.5% stake in Grab.

“The deal makes sense considering both companies have common investors — SoftBank and Didi — and waging a costly subsidy war in a currently loss-making space hurts both sides,” Tech Crunch said at the time.

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

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

grab stocks [GRAB] are down 82% from their peak in November 2021, just before the SPAC merger closed (data from Investing.com):

Uber ended up in shares of Aurora Innovation when Uber sold its own failed self-driving unit, Advanced Technologies Group, to a startup, Aurora Innovation, in exchange for a 26% stake in Aurora. The startup has been 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, in order to create hype.

Aurora Innovation went public in November 2021 through a merger with a SPAC. Following the announcement of the SPAC deal, shares rose to $17.77 on Nov. 19 and have since plummeted. Today shares are trading at $4.00, down 77% from the November high (data from YCharts):

Uber landed on shares of Didi, the Chinese ride-hailing and delivery start-up 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 at the end of June 2021, despite objections from Chinese authorities, via an IPO in the USA. As soon as the ADR started trading on the NYSE, it surged, reaching $18.01 before the collapse began. The threat of having to take the ADR off the list hung over the ADR from the start. In March of this year, Didi was delisted from Hong Kong.

Didi has now revealed that it was under investigation by the SEC for its IPO. “We cannot predict the timing, outcome or consequences of any such investigation,” it said. OK. Its shares may be suspended in addition to the delisting. So good luck.

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

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

Uber landed on shares of Zomato, a grocery delivery startup in India when Uber sold its grocery delivery business in India to Zomato in March 2020. In July 2021, Zomato went public at 76 rupees per share and its shares [ZOMT] started trading on the NSE in India. The shares initially surged, peaking at 160 rupees on Nov. 14 and then plummeting. Today the stock fell another 7.3% to a new low of Rs.64.45, down 60% from the November high.

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