Why PayPal Bought a $500 Million Stake in Uber

Global ride-hailing market to reach $126.5 billion in 2025

PayPal (PYPL) has invested in Uber’s (UBER) IPO, purchasing a $500 million stake in the company. The investment sees PayPal nabbing a piece of one of the fastest-growing technology markets. The global ride-hailing market was valued at $36.5 billion in 2017, and it’s forecast to grow to $126.5 billion by 2025, according to Allied Market Research estimates.

Uber is one of the world’s top ride-hailing companies. In the United States, the company dominates with a 69% market share followed by Lyft (LYFT) with a 29% market share, according to Second Measure.

Why PayPal Bought a $500 Million Stake in Uber

US online food delivery market to reach $15.5 billion

Uber is also into the online food delivery business. Therefore, PayPal’s Uber investment gives it exposure to another fast-growing market. The food delivery service market in the United States is valued at $8.5 billion, and it’s forecast to grow to $15.5 billion by 2022, according to Pentallect estimates.

Uber generated revenue of $2.6 billion in 2018, and it expects to generate revenue of as much as $3.1 billion in 2019.

PayPal and Uber expand their commercial relationship

PayPal’s relationship with Uber goes beyond commercial investment. Uber is one of PayPal’s clients, with PayPal processing payments for Uber and its riders. PayPal and Uber expanded their commercial relationship last month, when the companies agreed to collaborate in various payment areas, including the development of a digital wallet for Uber.