Skip to Content
Stock Analyst Update

What Postmates Acquisition Means for Uber

We think the deal could strengthen the firm's network effect moat source.


On July 6, (UBER) announced its acquisition of the online delivery service provider, Postmates, for $2.65 billion in an all-stock deal that will likely close in first-quarter 2021. We applaud this move as it will further consolidate the online food delivery market which could lead to pricing stabilization in the long-run. In addition, with Postmates, Uber will increase its lead over Grubhub as the number two player in the space, trailing only DoorDash. Plus, we think this deal could strengthen the firm’s network effect moat source, especially as the ride hailing segment returns to growth after the pandemic. We have not made significant changes to our model and continue to value 4-star Uber at $48 per share.

After the acquisition of Postmates closes, the U.S. online food delivery space will consist of only three major players--DoorDash, Uber Eats, and Grubhub. We think with fewer competitors, more rational pricing will emerge, similar to what was taking place in the ride hailing market prior to the pandemic. With less aggressive pricing, profitability for Uber Eats will become more likely. We continue to expect Uber to become GAAP profitable in 2024.

Based on numbers from Second Measure and Edison Trends, we expect the addition of Postmates to increase Uber Eats’ U.S. market share to over 30%, behind DoorDash’s nearly 45%, and ahead of Grubhub’s 20%-plus. With a larger market share, the supply and demand sides of Uber’s network effect moat source are likely to strengthen and help create synergies which Uber management estimates will result in around $200 million in annual cost savings beginning in 2022.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Ali Mogharabi does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.