Uber shares drop as Softbank plans to sell 45 million in stakes

Uber shares tumbled on Wednesday with more than 4.5 percent in extended trading, following a report stating that SoftBank is selling around $2 billion worth of shares, in a definitive attempt to recover from lost bets on Didi and other investments.

Japanese telecommunications and technology multinational conglomerate Softbank is selling a whopping 44 million shares in Uber as a final effort to contain around $4 billion in losses due to its investment in Chinese ride-hailing titan Didi, according to a CNBC report.

Earlier this week, The Financial Times reported that Softbank’s Didi share loses were approximately around $4 billion due to China’s latest regulatory attack on Big Tech.

By selling 45 million in stakes in the San Francisco-based ride-hailing company, Softbank Vision Fund will minimize its stake in Uber by roughly a third.

Due to Didi’s plunge, Uber endured a 5 percent drop in extended New York trading.

Reuters reported that the Japanese technology investment group decided to take the initiative to put its plan into action was not based on the recent tumble in Didi’s value, but mostly because the timing seemed convenient to take some profit.

Back in 2018, Softbank invested around $7.6 billion into Uber, and increased its investment to $333 million in the following year.

It is worth highlighting that all three companies are intertwined.

Softbank is Didi’s largest shareholder with a stake of more than 20 percent, while Uber also owns an estimated value of 13 percent in the Chinese ride-hailing app, and Didi acquired Uber China from Uber back in 2016 – where Uber was a huge pre-IPO shareholder, owning around 12 percent of the firm.

In the recent months, with Beijing tightening its noose on Big Tech firms, Chinese trading companies trading in the U.S., Hong Kong, and mainland China witnessed a sharp plunge in its market value.

Didi’s shares experienced an influential 40 percent drop since the Beijing-based firm began trading on the New York Stock Exchange (NYSE).

Two days after Didi debuted on NYSE, China’s internet regulator instructed app stores to remove Didi from its platform. This was announced under the pretense that the Chinese ride-hailing company was involved in unorthodox performance of collecting users’ personal data.