Uber has officially filed its S-1 registration statement to go public, making it one of the largest technology IPOs in history.
Uber is entering the New York Stock Exchange under the sign “UBER,” but has yet to reveal its offering price. Though Uber did not publish the valuation it’s seeking, the company is apparently looking to sell around $10 billion worth of stock, valuing the business between $90 billion and $100 billion, four times larger than that of United Airlines’ parent company and double that of FedEx.Its offering is being led by Morgan Stanley and Goldman Sachs.
Uber is the world’s most significant ride-sharing company, with a reach into 63 countries across the world. Its income comes not just from ride-sharing however from Uber Eats, its food delivery service, as well as from its trucking organization and bike and scooter sharing apps. The company recently boosted its arsenal, acquiring Middle-Eastern ride sharing giant Careem.
The prospectus, however, has revived concerns about how sustainable Uber’s service is. The company said in the release that it lost $1.8 billion in 2018, omitting particular transactions, on profits of $11.3 billion. And the prospectus likewise pointed out that its significant upward trajectory for profits growth was starting to slow.
The filing with the U.S. Securities and Exchange Commission reported Uber had 91 million average regular monthly active users on its platforms, consisting of Uber Eats, at the end of 2018. This is up 33.8 percent from 2017, however growth slowed from 51 percent a year previously.
It’s also unclear exactly how much cash primary stakeholders will make, however, Uber co-founder Travis Kalanick owns 8.6 percent of the company. He’s the third biggest shareholder with 117.5 million shares. Other notable stakeholders consist of SB Cayman 2 Ltd. and Alphabet.
Lyft sets a worrying tone
Uber’s archrival Lyft kicked off the tech IPO race, and the results weren’t great. Simply put, the Lyft IPO has been a catastrophe.
It was the front-runner in a long line of other highly hyped tech IPOs coming later this year, like Pinterest, Slack, Peloton, and others. Airbnb is another massive unicorn; however, management was already on the fence about a 2019 IPO. Lyft’s debut certainly didn’t salvage these concerns.
There was a lot of interest in Lyft at first, as it was extraordinarily oversubscribed, pushing the IPO price to $72. A few hours after the open on Friday, March 29, Lyft shares started trading on the open market, climbing north of $87 before closing just over $78.
Since it’s debut in public markets, the company’s share price has fallen to the low $60 range, approximately 15% lower than its IPO rate, and sentiment has only worsened.
Will Uber prosper where Lyft has failed?
In the race for ride-hailing domination, Uber is officially in the pole position, significantly outperforming rival Lyft by more than $9 billion in earnings and a minimum of 60 million users.
But it’s more complicated than merely being ahead …
Investors and experts might be feeling that billion-dollar tech IPOs are losing their glow, not just because more financiers are asking challenging questions about their potential customers, but because the startups overstated the pent-up need for their offerings.
Catherine McCarthy, an Allianz Global Investors research expert, explained: “Lyft wanted to be first… and it got to a point where they got so aggressive with their pricing and they got kind of greedy,”
For all the competitions in between the two companies, Uber and Lyft may be connected at the hip. If Lyft’s stock proceeds to fall, it could make Uber’s Wall Street debut a lot less exciting … and by extension, other tech IPOs preparing to list in 2019, such as Airbnb and Pinterest.