Windsor Star

Uber looking to raise up to $9B in first offering

- CATHY BUSSEWITZ

Ride-hailing giant Uber is aiming to raise US$9 billion in its mammoth initial public stock offering that, while smaller than initially expected, still dwarfs most stock market debuts.

The San Francisco-based company expects to be valued at US$80.5 billion to US$91.5 billion, falling well below prior estimates that rose as high as US$120 billion, in a sign that investors may be taking a more cautious approach to ride-hailing after the stock performanc­e of Uber’s rival, Lyft. Even so, Uber is on track for one of the largest IPOs in history. The company plans to sell 180 million shares for between US$44 and US$50 each.

Lyft went public last month and its stock price fell 21 per cent from its initial offering price of US$72, and was selling for about US$57 on Friday. “With Lyft’s IPO being down more than 20 per cent in a market that’s hitting new highs every day, that’s a dynamic that probably has been factored in as well,” said Daniel Ives, managing director of equity research at Wedbush Securities. Uber is part of a wave of technology companies that are going public, and Pinterest and Zoom both saw their stock prices climb substantia­lly after their IPOs this month. Slack and Postmates are also waiting for their turn.

Over the coming weeks Uber is likely to revise those figures as it launches its socalled road show, where it pitches the company and gets feedback from potential investors. It is expected to begin trading on the New York Stock Exchange next month.

Uber also disclosed that PayPal plans to buy US$500 million in stock at the IPO price, and that the companies will explore future commercial payment collaborat­ions, including the developmen­t of Uber’s digital wallet. Uber gave potential investors a first look at its finances this month, revealing nearly US$8 billion in losses over a decade. That mirrors the challenges faced by Lyft.

But Uber also showed impressive growth. Its revenue totalled US$11.3 billion in 2018, which was a 42-per-cent increase from US$7.9 billion in 2017, and far above its US$495 million in revenue in 2014. That rapid growth has continued this year. On a preliminar­y basis, revenue rose to a range of US$3 billion to US$3.1 billion during the three months that ended March 31, compared with US$2.6 billion a year ago. Both Uber and Lyft face an uncertain path to profitabil­ity as they deal with intense competitio­n, high costs to pay drivers, increased regulation by cites and a long, uncertain road to the developmen­t of autonomous vehicles. “We know that companies with large losses tend to be problemati­c for IPO investors,” said Kathleen Smith, principal at Renaissanc­e Capital, which provides institutio­nal research and IPO exchange traded funds. Uber stockholde­rs will also be selling 27 million shares if the underwrite­rs exercise their option to purchase stock.

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