According to The New York Times’ sources, Uber is reportedly gunning for an IPO valuation of up to $100 billion. However, this figure is below a $120 billion valuation that was floated by investment bankers. This would still make Uber’s IPO one of the biggest in recent years. Shares in Uber are expected to start trading next month.
As a result of this report, Lyft’s shares dropped about 11% on Wednesday as analysts started questioning the company’s valuation ahead of Uber’s public debut. Ever since Lyft went public, the shares dropped more than 15% from the offering price. Uber is expected to formally file to go public later on Thursday.
The reason why Uber is seeking the lower valuation is reportedly due to Lyft’s poor performance. “It’s the Lyft effect,” said Renaissance Capital principal Kathleen Smith via The New York Times. “This is what Uber should try very hard to avoid — it should not have a stock that breaks its I.P.O. price.”
When Uber’s public offering prospectus is published, it will give analysts the opportunity to review the company’s financials and strategy. However, it will not contain any details about the offering’s potential price. And then Uber is planning to begin its investor roadshow during the week of April 29th in preparation for the IPO in May. Uber is reportedly going to trade on the New York Stock Exchange.
The stock may begin trading at between $48-$55 per share. Based on those figures, it would account for the $90-$100 billion valuation and the $10 billion that the company is expected to raise from the IPO. Morgan Stanley and Goldman Sachs are reportedly Uber’s leading underwriters.
The $90-$100 billion valuation is still much higher than the $76 billion valuation that Uber had in its last round of funding in August. As a comparison, Facebook’s IPO led to a $104 billion valuation in 2012 and Alibaba had the largest initial offering at $168 billion.
Uber is still far from profitable as a company. In February, Uber reported that it lost $842 million in Q4 2018 on revenue of $3 billion. In order to cut costs, Uber has been exiting areas where it was losing money under the leadership of CEO Dara Khosrowshahi. For example, Uber sold its Southeast Asia business to a rival called Grab. Uber now reportedly has a 27.5% stake in Grab.
The idea for Uber reportedly came together back in 2008 while friends Travis Kalanick and Garrett Camp were attending the LeWeb annual tech conference, according to Investopedia. One year prior to the conference, Kalanick sold Red Swoosh to Akamai Technologies for $19 million and Camp sold StumbleUpon to eBay for $75 million. During the conference, the two of them struggled to get a cab so they came up with an idea of the ability to summon a limo through an app.
After returning home, Camp bought the domain name UberCab.com and persuaded Kalanick to help him build the company. In early 2010, the service launched in New York with three cars and then it officially launched in San Francisco several months later.
Ryan Graves was named the CEO of Uber in August 2010 until Kalanick assumed the position in December 2010. Graves took on the role of COO and board member at that time.
Today Uber has 75 million riders and 3 million drivers that use the service across 65 countries. And 15 million trips are completed every day as Uber recently surpassed 10 billion trips worldwide.