What's going on?
Uber said on Tuesday that it would buy Dubai-based rival Careem for $3 billion – the ride-hailing company’s largest purchase ever.
What does this mean?
Reports of a potential Uber-Careem convoy first surfaced last July… and they were right. Careem operates in 90 cities across north Africa, southern Asia, and the Middle East – serving 30 million users. While some operations will be merged (pending approval from the local authorities), Uber and Careem will, unusually, continue as separate brands.
Uber is accelerating toward an April initial public offering (IPO) and buying Careem could help it improve profitability, making the company more attractive to potential investors. The IPO – expected to be one of the biggest ever – is slated to value Uber at up to $120 billion, even though it lost $2 billion last year.
Why should I care?
For markets: Ridesharing to the stock market.
Uber’s North America rival Lyft is set to “go public” on Friday, hoping to raise more than $2 billion from investors at a valuation of up to $23 billion. Lyft also booked a big loss in 2018 – although a lack of profitability doesn’t faze investors these days (tweet this). They’re hungry for the next generation of startups to grow up: ever since the dotcom bubble burst in 2000, tech companies have been waiting longer to go public, thanks to higher scrutiny and low interest rates allowing cheaper access to funds. But the stock market is currently looking a little shaky – and more companies competing for investors’ cash could lead to lower share prices overall.
The bigger picture: Uber’s not the only one buying.
In another supersized buy, hamburglar McDonald’s is making its biggest purchase in two decades – spending a reported $300 million on AI personalization company Dynamic Yield. McDonald’s plans to use Dynamic Yield’s tech to customize its ordering experience, tailoring recommendations to things like the weather and local trends – and encouraging chowhounds to add more to their McTrays.