Investors in Uber and Expedia do not believe that a merger between the two companies is likely at this time, according to reports from the Financial Times. However, there are several compelling reasons why a combination could be beneficial. Both companies have the goal of transporting customers from point A to point B, and by joining forces, they could potentially expand their reach even further.
This potential merger would also bring together familiar faces. Dara Khosrowshahi, who was brought in as Uber’s CEO in 2017 after Travis Kalanick stepped down, previously served as the head of Expedia, which has a market value of $20 billion. Barry Diller, Expedia’s chairman and largest individual shareholder, is Khosrowshahi’s mentor. Given this connection and shared background, it is possible that any cultural differences between the two companies could be easily resolved.
With Uber currently valued at $170 billion in the market, it has the financial capacity to take on such a risk. If Khosrowshahi were to offer around $26 billion for a deal with Expedia, he would only need to increase Expedia’s projected free cash flow for 2026 by $1.6 billion – just over 10% of their combined sales and marketing expenses – in order to achieve an attractive 15% return on investment.
However, these financial figures alone may not be enough motivation for such a deal within the tech industry where executives often strive for significant growth or nothing at all. Despite Uber’s shares nearly doubling over the past year and receiving positive ratings from 48 analysts as a “buy,” acquiring an online travel agent like Expedia whose revenue growth rate is only half that of Uber seems rather unexciting.
Instead, what makes this potential merger more enticing is the possibility of creating a ”super app” – an all-in-one platform that dominates users’ attention and spending habits. China’s WeChat serves as an example with its combination of messaging services, payment options, fitness tracking features along with numerous third-party applications known as “mini programs.” While Western counterparts like facebook (Meta) and Google (Alphabet) have kept their services separate thus far.
Despite this lack of precedent in Western markets though; tech leaders like Mark Zuckerberg (facebook co-founder), Elon Musk (X owner), PayPal have expressed interest in developing comprehensive apps that combine various functionalities into one platform. Khosrowshahi himself has mentioned his vision for Uber becoming an “operating system for your everyday life.” Acquiring Expedia would bring him closer towards realizing this ambition.
Alternatively; Khosrowshahi could choose to stay focused on short trips where there is still ample room for growth—especially considering advancements in autonomous vehicles technology drawing nearer mainstream adoption levels. Currently; only half of Uber users take one or two rides per month while just a small fraction of American adults use rideshare services at all—indicating untapped potential within this market segment.
