PayPal Writes Down $228 Million on Investments After Uber Sinks
By Julie Verhage
October 9, 2019, 7:30 AM GMT+10:30
PayPal Holdings Inc. will report a $228 million loss on investments before taxes in the third quarter, driven in large part by a bad bet on Uber Technologies Inc. just before it went public.
The San Jose, California-based payments company said the investment in Uber, for $500 million at the initial public offering price, had declined 34%. Another investment, in Latin American online retailer MercadoLibre Inc., had declined 10%, PayPal said.
PayPal’s stake in the world’s largest ride-hailing business was tied to what the companies described as a closer collaboration on payments technology. Uber is the most prominent app to use PayPal’s nascent Pay With Venmo feature. But Uber’s stock has under-performed due to a combination of slowing growth and accelerated losses.
In an email, a PayPal spokeswoman cited the “inherent difficulty” in predicting the stock market for the mismatch between its previous forecast and the reality. The company will report financial results on Oct. 23.
At the time of writing, Uber's share price at $29.28 continues its inexorable pursuit of terminal value.