In Q2 2021, however, the difference in outlook between the two becomes apparent. Airbnb is widely expected – even by Reddit’s avid stock-watching crowds – to become a highly-valued stock. Airbnb CEO Brian Chesky stated during the Q1 2021 update that the company expects the return of urban and cross-border travel to give the company significant tailwinds in the coming quarters. On top of that, as remote work becomes more and more prominent, this will likely boost the company’s home-sharing segment.

Meanwhile, Uber – like most Western ride-sharing companies – has been battling lack of driver availability, many of whom sought other avenues of work during the pandemic. As a result, fares in the U.S. have risen by an average of 40% in the month of June. But the company does have a ray of light in in the East – its stake in DiDi Chuxing (presently diluted to 15.4%) is bound to add an estimated $9-12.8 billion in value to Uber after the Chinese ride-sharing behemoth goes public later this year. DiDi also owns the largest electric vehicle charging network in China, with over 30% market share of total public charging volume in the first quarter of 2021. This, too, will prove to be an indirect means of shoring up Uber’s profits since China is the world’s largest market for electric vehicles.

However, in the immediate short term, Uber’s investee is in hot water: less than a week after DiDi listed on the New York Stock Exchange, the Chinese government announced on July 2nd that new users would not be able to download the company’s ride-hailing app due to an ongoing review after the Cyberspace Administration of China (CAC) reported that the app illegally collected users’ personal data. By July 6th, the company’s newly-listed shares fell more than 19% and lost $15 billion of market value on that day alone. The company also faces two lawsuits in US federal courts alleging that the company failed to disclose ongoing talks with Chinese authorities on this matter. For Uber, this is a cause for concern: the perceived diversification benefits from its investment doesn’t seem to be bearing fruit just yet. However, in the long run – barring DiDi’s complete closure by the Chinese government – it is still likely that investment benefits would materialize after the matter at hand is satisfactorily resolved.

Of course, the direction in which the stock is supposed to go is a matter of intense conjecture. Whether up or down, the price trajectory can be reasonably expected to be quite bumpy.

References:

1. Uber Revenue and Usage Statistics (2021), Business of Apps
2. Understanding Why Uber Loses Money, Crunchbase News
3. Airbnb Revenue and Usage Statistics (2021), Business of Apps
4. Here’s how much Uber, Softbank and Tencent can possibly gain from Didi’s IPO — the largest Chinese share sale since Alibaba, Business Insider