Postmates is reportedly looking for a buyer - and WeWork's IPO collapse could be the reason
- Postmates is in talks to find a potential buyer, CNBC reported on Tuesday, citing a single source.
- The food-delivery startup has also laid off dozens of employees and decided to close its office in Mexico City, CNBC reported, citing sources familiar with the matter.
- Postmates filed confidential IPO paperwork in February, but delayed its plans to join the stock market after Uber and Lyft delivered disappointing debuts and WeWork pulled the plug on its IPO in the face of fierce investor backlash.
- View Business Insider's homepage for more stories.
Postmates is in talks to find a potential buyer, CNBC reported on Tuesday, citing a single unnamed source.
The food-delivery startup - which boasts around 1,300 employees - has laid off dozens of employees and decided to close its office in Mexico City, CNBC reported, citing sources familiar with the matter. It has also trimmed headcount in San Francisco, Los Angeles, Nashville, and elsewhere, the news outlet reported.
"We made the difficult decision to end operations in Mexico City as we focus on our continued growth in the US," a Postmates spokesperson told CNBC. "We continually review our business to ensure that staffing is aligned with current business needs and have made small adjustments as a result."
The reports of layoffs, office closures, and sale talks come after Postmates raised $225 million in September, valuing it at $2.4 billion. The startup filed confidential IPO paperwork in February, but delayed its plans to join the stock market after Uber and Lyft delivered disappointing debuts and WeWork pulled the plug on its IPO in the face of fierce investor backlash.
"We had a window earlier in the year, but after [the] somewhat lukewarm reception of tech companies, specifically after WeWork and their losses, I think we're ready to go when we feel that the market conditions are right," Postmates cofounder and CEO Bastian Lehmann told CNBC last month. "We have the time to figure out when we want to go out."
Money has poured into food-delivery companies in recent months. DoorDash - which counts WeWork-investor SoftBank among its biggest backers - raised $100 million at a valuation close to $13 billion last month, according to Bloomberg. Amazon led a $575 million financing round into Deliveroo in May, which likely valued the startup at north of $4 billion.
However, food-delivery startups are facing more and more questions about their business models and paths to profitability. GrubHub's stock plummeted by more than 40% in a day after it revealed a steep third-quarter earnings decline and gave a muted sales forecast.
Lehmann distanced Postmates from its rival, telling CNBC the issues were "100%" specific to GrubHub. "The idea that bad management equals a bad market is a shoe that doesn't fit the new breed of companies," he said.
He added that different brands appeal to different customers, and Postmates' millennial fans may not be excited by a company that caters to people over 50.
