Uber may be eyeing Lime to bolster its micro-mobility ambitions. By leading an emergency funding round into the scooter company, Uber’s strategy would be to lower Lime’s valuation before taking over.
Uber CEO Dara Khosrowshahi told investors in March it was well positioned to weather the storm created by lockdown and social distancing orders. Last month, the company laid out a new strategy of getting idle drivers back on the road by broadening the spectrum of products they can deliver.
Now the company is reportedly in talks to lead a $170 million round of funding into Lime, one of the big names in the scooter-sharing industry. According to The Information, the deal is supposed to reduce Lime’s valuation to $510 million, which is much lower that the $2.4 billion it boasted in 2018. Then, when the time is right, Uber could be in the perfect position to buy the company at a huge discount to bolster Jump, the bike and scooter business it acquired two years ago.
This comes at a time when Lime’s business is in trouble, as it had to pause operations worldwide in order to aid cities’ efforts to enforce social distancing measures. It was also forced to downsize its workforce by 13 percent, which means that 80 people effectively lost their jobs.
As for Uber, it’s not exactly sitting on piles of cash. The company recently discussed laying off 20 percent of its workforce and discontinued Uber Eats in seven countries. And while just a few months ago it was confident it would reach profitability by the end of 2020, that looks increasingly unlikely as the company withdrew that guidance just as many countries began to issue lockdown orders.
Uber’s ambitions are to become the “Amazon of transportation,” if we are to use CEO Dara Khosrowshahi’s words. Whether or not that’s something it will ever achieve could depend a lot on how people’s habits will change (or not) once the lockdowns are lifted.