Uber Freight seeking investors

Parked Uber Freight rig

Uber Technologies (NYSE: UBER) is reported to be in talks to take on additional investors in its digital brokerage unit, Uber Freight. Bloomberg published an article attributed to “people with knowledge of the matter” who said the San Francisco-based company is seeking to raise $500 million in incremental funding.

The report said this would place the unit’s valuation around $4 billion. Assuming an annual run rate of the nearly $200 million in revenue the division generated in the first quarter, Uber Freight is firmly in the 20 largest brokerage companies in the nation. Uber’s total market capitalization is roughly $54 billion.

In May, the company said it was “re-evaluating” its noncore segments, like Uber Freight and autonomous driving. Uber has been shedding employees, cutting costs and rolling back its capital commitments in efforts to preserve liquidity amid the pandemic, which has dented its core ride-sharing business.

Uber Freight adjusted course earlier in the year, placing more emphasis on reaching profitability versus growing scale at any cost. The unit was expected to be profitable in terms of earnings before interest, taxes, depreciation and amortization (EBITDA) by the end of 2020. That timeline was recently pushed back to 2021 as the COVID-19 lockdowns spread.

The first quarter of 2020 resulted in a $64 million adjusted EBITDA loss for the unit, a sequential improvement from the $81million fourth-quarter loss but more than twice the loss from the first quarter of 2019.

Last September, Uber Freight announced it was moving its headquarters to Chicago, with plans to nearly double the unit’s workforce. The goal was to add 2,000 employees over the next three years, with the bulk of those new hires working in the brokerage segment. However, by January it was reported that some of Uber’s new office space would be put up for sublease.

Shares of UBER are up more than 6% in after-hours trading.

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