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Uber has revolutionised the way we think about passenger transportation. On 11 April 2019, the ride-hailing giant filed for its IPO and, if all goes to plan, expects to start trading on the New York Stock Exchange (NYSE) on Friday 10 May 2019. We run through everything you need to know.
Quick facts: Uber’s business
The history of Uber goes back to 2009, when Garrett Camp and Travis Kalanick launched their exclusive on-demand car service called UberCar. UberCar quickly became UberX, as the company found itself on the front page of big publications lauding Uber’s disruption in the transportation industry.
UberX, allowing anyone with a car and a license to become a company’s freelance driver, became a hit.
With the advent of UberX in 2013 the company extended its international footprint. Today it operates in 63 countries and 700 cities around the globe, completing over 15 million trips on a daily basis.
Uber is considered a corporate anomaly, with exponential business growth and huge money losses at the same time. In 2017, the company stumbled after a series of ethical and legal scandals. In its IPO prospectus, Uber acknowledged that the company lost hundreds of thousands of users during a #DeleteUber social media campaign.
Led by Dara Khosrowshahi since 2017, Uber extended its mission from a simple ‘tap a button, get a ride’ to something more profound. Today, the company is experimenting with alternative means of transportation, such as scooters and bikes. It also launched a popular Uber Eats food delivery service. In 2018, Uber Eats revenue almost tripled to $1.5 billion from $587 million in 2017.
Uber’s IPO plan
Uber is going public on the New York Stock Exchange (NYSE), listing its shares under the ticker symbol UBER. According to the recent estimates, Uber could be valued between $90 and $100 billion. Goldman Sachs and Morgan Stanley predicted an Uber valuation of around $120 billion, which would make it one of the biggest listings in history – even surpassing Google ($23 billion) and Facebook ($104 billion).
If the company reaches the $100 billion benchmark, it will 4 times outnumber the valuation of Lyft, Uber’s major rival, hitting $34.3 billion during the IPO.
Uber plans to sell $10 billion worth of stock, listing 180 million shares at between $44 and $50 per share.
According to Uber’s filing, the company finally turned a profit of $997 million in 2018. It happened largely due to selling parts of its business in Russia and southeast Asia. Excluding these gains, Uber lost $1.8 billion. However, it’s much less than Uber’s net loss of $4 billion in 2017.
In 2018, the revenue growth rate also slowed down. It rose a moderate 42% up to $11.3 billion, after it more than doubled in 2017. Uber’s prospectus shows that the company’s gains significantly depend on just 5 cities, which comprise almost a quarter of its total bookings. These cities include New York, Los Angeles, San Francisco, Sao Paulo and London.
The number of Uber’s monthly users increased by 34% and reached 91 million people.
According to the company’s CEO Mr. Khosrowshashi, Uber “will not shy away from making short-term financial sacrifices where we see clear long-term benefits”.
The Uber’s offering is expected to reverberate across the world’s financial markets and strengthen the company’s position among tech giants. However, Uber’s prospectus revealed questions about the company’s sustainability.
Uber’s major competitor in North America – Lyft – also went public last month and was valued at $24 billion. On the second day of trading, Lyft shares fell below its offering price, as investors were uncertain about the company’s prospects of turning a profit.
Recently, Uber has purchased Careem, its major competitor in the Middle East, for $3.1 billion to ease the rivalry in the region. Uber also attracted new investments form the Japanese conglomerate SoftBank.
Answering to more than 60,000 drivers, who threatened to file arbitration cases against the company, Uber promised to award cash bonuses, ranging from $100 to $10,000 based on the driver’s track record at Uber. Drivers will be able to use their bonuses to buy Uber stock at its IPO price.
Uber’s funding: the major investors
The major winners from the Uber stock IPO will be its early investors and founders, having large stakes in the company’s stock. According to Uber’s prospectus, the major shareholders are Softbank (16%), Benchmark (11%), Public Investment Fund from Saudi Arabia (5%), Alphabet (5%) and Mr. Kalanick, who owns (9%).
All in all, in 2018 Uber was funded by 96 different individual and corporate investors and raised over $22 billion, which makes it the #1 rated unicorn in the world.