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Saudi Arabia Joins SoftBank in Biggest-Loser Club with $1.1 billion Uber Loss

Last Updated September 23, 2020 1:13 PM
Mark Emem
Last Updated September 23, 2020 1:13 PM

Uber Technologies’ (NYSE:UBER) fifth largest shareholder, the sovereign wealth fund of Saudi Arabia, has now lost over a billion dollars by investing in the ride hailing firm.

Based on the most recent holdings report  to the SEC, the Kingdom of Saudi Arabia’s Public Investment Fund currently owns 72,840,541 shares in Uber Technologies. PIF made the investment  in June 2016, per The Economist. At the time, the investment was worth $3.5 billion.

Based on Tuesday’s closing price  of $32.53 per share, PIF’s investment is now worth $2,369,502,799. On paper, Saudi Arabia’s sovereign wealth fund has therefore lost $1,130,497,201 since it invested in the ride-hailing firm over three years ago.

Uber price chart. | Chart:: TradingView

As of April, PIF’s stake in Uber was about 4.3%, ahead of Google Ventures which had a 4.2% stake.

What went wrong with the Uber Investment?

PIF’s biggest mistake was in the timing of its investment. The sovereign wealth fund put its money in the ride-hailing firm after, with the benefit of hindsight, the valuation had peaked.

This is in contrast to another top shareholder, venture capital firm Benchmark Capital Partners. The VC firm was an early investor, having led a series A round in 2011 that saw it dole out $12 million. In 2017, the stake was worth over $7 billion. This has made Benchmark’s early investment in Uber one of the best VC deals in recent history.

Currently, Benchmark has a stake of 8.5% in the mobility firm having offloaded part  of it to SoftBank last year. SoftBank is now Uber’s biggest shareholder.

Uber’s biggest shareholders. | Source: CNBC

You are in ‘good’ company, PIF

In making the paper loss of hundreds of millions of dollars, PIF’s only consolation is that it could have been worse. SoftBank, which has already lost massively in other tech investments such as WeWork and Slack, is expected to see the value of its stake in Uber record a $3.54 billion loss.  That’s more than triple what the Saudi sovereign wealth fund is writing down.

Since the IPO, Uber’s stock has lost over 30% of its value. If the second-quarter results  are a harbinger of things to come, it could get worse for the mobility firm. During the second quarter, Uber’s net loss amounted to $5.24 billion compared to a net loss of $878 million a year ago, showing it was losing money faster than had been anticipated.

So far this year the ride-hailing firm has conducted three rounds of layoffs  in a bid to stem losses but the bleeding is yet to stop.