Uber Technologies (NYSE: UBER) has finally received some relief to its stocks after reports surfaced that the gig-employment company was seeking to sell its Uber Eats division in India to Zomato, a competing gig-based delivery company.
In an article by the Wall Street Journal, it was revealed that Uber was in talks to sell off its Indian based Uber Eats division to Zomato, an Indian based food delivery company and one of Uber Eats' competitors in India, according to anonymous sources close with the company. The measure comes as Uber is struggling to make itself profitable in the face of a disastrous IPO, and the company coming under intense scrutiny by financial experts and the company's investors after its Q3 report revealed that its financial losses topped $1 billion.
While the deal has not been finalized and details are still relatively scant, the news that Uber was at least considering selling to Zomato was enough for the company's stock to experience a healthy bump. By the end of trading on Monday, shares of Uber were up by 16%, bringing the company some much-needed relief. Despite the slight boon, Uber is still well below its initial price from its IPO in May.
Scaling back operations has been a common tune for Uber as it struggles to reach profitability in the face of shrinking confidence in the company. Within the last few years, Uber has let go of its divisions in Russia, China, and parts of Asia in the face of stiff local competition and the inability to turn a profit due to its sheer size and considerable operating budget. In India, Uber Eats faced heavy competition from Zomato, which has a hefty stake in the gig-based food delivery market in India. Zomato has been highly successful since its founding in 2008, being valued at over $2 billion. The sale of Uber Eats' stake in the Indian gig-economy market to Zomato could give the Indian company an edge over its competitors.
Despite the attention that the potential deal has brought to the companies, and the bump in Uber's stock price, neither Uber nor Zomato have addressed the deal. Both companies have refused to comment on what they see as "speculation and rumors."