Uber IPO could see $120 billion value

Still has hurdles to cross before it can go public

Uber Technologies and Lyft are solidifying plans for initial public offerings next year, when a wide pool of investors will decide what the money-losing ride-hailing businesses are actually worth.

Wall Street’s top banks, vying for a coveted underwriting spot on Uber’s IPO, suggest the San Francisco company could produce one of the most valuable offerings ever. In their pitches to Uber, Morgan Stanley and Goldman Sachs Group Inc. said the business could be valued at about $120 billion in an IPO, people familiar with the matter said, who asked not to be identified because the discussions were private.

Meanwhile, Lyft has selected JPMorgan Chase & Co., along with Credit Suisse Group AG and Jefferies Financial Group Inc., to lead an offering in the first half of next year, according to people familiar with the matter. The banks proposed a valuation range of $18 billion to $30 billion, with a target of $25 billion, one of the people said. That valuation for the second-largest U.S. ridehailing company would be based in part on a comparison to GrubHub Inc.’s food-delivery business.

Uber chief executive officer Dara Khosrowshahi has said publicly that the company is targeting an offering in the second half of 2019. But he’s now considering moving up that date, said some of the people familiar with the matter. Khosrowshahi recently said privately that he wants the company to go public in the first half of the year, one of the people said.

That timing could create conflicts for Lyft’s plan for a listing in March or April. Alibaba Group Holding Ltd. and JD.com Inc., two fierce Chinese e-commerce rivals, went public within months of each other, and that could happen again with Uber and Lyft. It could result in a game of chicken, where the first company to list shares defines expectations for the next.

Representatives for Uber, Lyft, JPMorgan, Credit Suisse, Jefferies, Morgan Stanley and Goldman Sachs declined to comment. The Wall Street Journal reported details around the IPO processes earlier Tuesday.

Uber still has hurdles it needs to cross before it can go public. The company’s chief financial officer, Nelson Chai, only joined two months ago, and he needs to fill vacancies in his department.

The business has lost more than $11 billion since its founding, and it shows no signs of letting up.

Uber is currently pursuing a bond offering led by Morgan Stanley, and prospective investors were informed that the company doesn’t expect to turn a profit for at least three years, a person familiar with the matter said. It anticipates revenue of $10 billion to $11 billion this year, compared with less than $8 billion last year, the person said.

If Uber’s valuation is anywhere close to $120 billion, it will be a gigantic offering. Public investors ultimately will decide what Uber is worth.

The bankers’ speculative valuation is a 122 per cent increase over the blended price that SoftBank paid to invest in January and 58 per cent over the price at which Toyota Motor Corp. purchased shares in August.