Uber and Zipline Partner on Drone Delivery: More Growth Ahead?

Operating across four continents, Zipline completes a delivery every 20 seconds. Over the past decade, it has developed an international logistics network serving more than 5,000 hospitals, helping save over 12,000 lives annually and completing 135 million-plus autonomous flight miles. The company is now introducing its technology and services in the United States, with the aim of delivering essential items within five to 10 minutes.

Zipline has completed more than 2.7 million deliveries involving over 20 million items. Its services have helped reduce traffic and carbon emissions while saving customers time.

Uber is developing a flexible hybrid delivery network that integrates couriers, sidewalk robots and drones, enabling each delivery to use the most suitable transportation method. The partnership combines Zipline’s quiet, fast and precise delivery technology with Uber Eats’ network of millions of customers and hundreds of thousands of small businesses. Both companies intend to accelerate the widespread adoption of drone delivery and provide fast, affordable autonomous services to more consumers.

Uber CEO Dara Khosrowshahi described the partnership as an opportunity to combine Zipline’s advanced technology with its extensive connections to consumers and local merchants. Khosrowshahi indicated that the collaboration could shape the future of delivery by offering a faster and more sustainable way for people to receive essential items. He also expressed an intention to introduce the technology to additional communities and make autonomous delivery part of everyday life. Zipline co-founder Keller Cliffton noted that technology once considered science fiction was becoming increasingly integrated into daily life.

Drones could transform delivery by reducing delivery times, costs and emissions compared with traditional methods, enabling meals and everyday essentials to reach customers within minutes.Top of Form

On similar lines, last year, Uberentered into a partnership with drone operator Flytrex. The partnership aimed to launch drone delivery on the Uber Eats platform. The partnership resulted in the combination of Flytrex’s proven autonomous drone delivery system and Uber’s global platform and logistics expertise for creating a fully integrated end-to-end experience for speed, safety and scale. With autonomous drones being the future of food delivery, Uber’s move to ink a deal with Flytrex is a prudent one.

Flytrex’s expertise in the autonomous drone food delivery space is evident in the fact that it has completed more than 200,000 deliveries across the United States and operates under FAA-certified safety standards, demonstrating that the drones can sharethe skies with manned aircraft.

The association with Flytrex marked Uber’s return to the field of drone deliveries after 2019, when Uber Eats intended to test delivering food by drone to customers in San Diego and made a few test deliveries in partnership with McDonald's MCD. Uber Eats collaborated on the experiment with Uber Elevate, the company’s aviation division, at that time. However, the testing in partnership with McDonald’s failed to launch commercially.  

Ultimately, Uber sold its aviation division to Joby Aviation JOBY in 2020. The acquisition by Joby Aviation resulted in the merger of its electric vertical takeoff and landing technology with Uber’s experience in on-demand mobility services. Joby Aviation is currently quite close to commercializing air taxi services.

UBER’s Share Price Performance, Valuation and Estimates

Shares of UBER have gained in low single digits (% wise) over the past three months. Despite the not-so-impressive performance, UBER’s shares have outperformed the Zacks Internet-Services industry over the same time frame.

3-Month Price Comparison

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From a valuation standpoint, UBER trades at a 12-month forward price-to-sales of 2.44X. UBER trades at a discount compared with its industry.

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See how the Zacks Consensus Estimate for Uber’s earnings has been revised over the past 90 days.

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UBER's Zacks Rank

UBER currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

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