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UBER Reportedly Planning to Spin Off Postmates Robotics Unit

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Uber Technologies, Inc. (UBER - Free Report) is reportedly planning to spin-off Postmates X, the robotics division of its recently acquired delivery startup, Postmates.

According to a TechCrunch report, Postmates X is looking for investors as it seeks to become a separate company under the name Serve Robotics. The startup would continue to be run by its current head and leader of the serve program, Ali Kashani. Per the TechCrunch report, Uber is in talks to retain an ownership stake of 25% in the new startup and would maintain a commercial agreement with Serve Robotics. Despite all the speculations, Uber has not yet commented on the report.

The potential spin off is in line with Uber’s strategy to shed side businesses and focus on its profitability goal. Last December, the company entered into a deal to sell its flying taxi unit, Uber Elevate, to Joby Aviation. In a similar deal with Aurora Innovation, the company will sell its self-driving unit Advanced Technologies Group or ATG.

With Uber’s core ride-hailing business experiencing a significant drop in ride volumes amid the coronavirus pandemic, its initial goal of becoming profitable (on an adjusted basis) in 2020 has been affected. The company’s current expectation is to reap profits on an adjusted EBITDA basis in 2021. While coronavirus is taking a toll on Uber’s rides operations, it is causing a surge in its delivery business as order volumes from homebound customers rise. Aiming for profitability, the company is focusing on its core ride-hailing and delivery platforms while exiting the unprofitable side businesses.

Zacks Rank & Key Picks

Uber carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Internet - Services industry are Baidu, Inc. (BIDU - Free Report) , Shopify Inc. (SHOP - Free Report) and Eventbrite, Inc. (EB - Free Report) . While Baidu and Shopify sport a Zacks Rank #1 (Strong Buy), Eventbrite carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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