Uber Technologies Inc. (NYSE: UBER) saw its stock price plummet 6.17% in Wednesday's trading session, as investors reacted to news of increased competition in the food delivery space. The significant drop came after Domino's Pizza announced an expansion of its partnership with DoorDash, potentially threatening Uber's position in the food delivery market.
Domino's Pizza revealed plans to add the DoorDash app for delivery orders nationwide starting in May, with further expansion to Canada later this year. This move marks a significant shift for Domino's, which had long resisted partnering with third-party delivery services. The partnership could help Domino's reach more customers and boost sales, while also strengthening DoorDash's position in the competitive food delivery market.
For Uber, which has been relying on its Uber Eats division as a key growth driver, this development presents a notable challenge. Uber Eats has been a crucial part of the company's strategy to diversify beyond ride-sharing, especially as the COVID-19 pandemic boosted demand for food delivery services. The expanded partnership between Domino's and DoorDash could potentially eat into Uber Eats' market share and put pressure on its growth prospects.
The broader market saw modest gains on Wednesday, with major indices rising slightly. However, Uber's significant drop outpaced the general market movement, suggesting that investors were particularly concerned about the potential impact of the Domino's-DoorDash partnership on Uber's business prospects.
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