Uber reported to unobtrusively file for IPO in race with Lyft to market
Uber confidentially filed paperwork Thursday to go public, according to two people with knowledge of the matter, officially moving toward what is expected to be one of the biggest and most anticipated tech company stock market debuts ever.
The ride-hailing company filed its paperwork with the Securities and Exchange Commission on the same day its rival Lyft also filed for an offering, said the people, who requested anonymity because they were not authorized to speak publicly. Each company is rushing to beat the other to the public markets in the first half of next year during a fair climate for technology IPOs and worries of a potential economic recession.
Uber and Lyft declined to comment. The Wall Street Journal reported earlier that Uber had filed its public offering documents.
Uber, the world’s biggest ride-hailing company, has been told by investment bankers that it could be worth as much as $120 billion in an IPO. At that valuation, it would be the biggest offering since the Alibaba Group of China began trading on the New York Stock Exchange in 2014. It would dwarf the market capitalization of more established companies such as Goldman Sachs, putting it at around the same value as IBM or McDonald’s. And it likely would provide enormous windfalls for many of its investors, founders and employees.
It also would be a steep jump in what private investors thought Uber was worth. In August, when Toyota made a $500 million investment in Uber, the company was valued at $76 billion.
Morgan Stanley and Goldman Sachs have submitted proposals to take Uber public. Lyft, which was last valued by private market investors at $15 billion, recently picked JPMorgan Chase to lead its IPO.
Yet Uber faces a huge hurdle as it aims to go public: It is deeply unprofitable. Uber said last month that it lost $1.07 billion in the third quarter. Although as a privately held company it is not obligated to report its earnings, Uber has made a habit of doing so.
Uber’s chief executive, Dara Khosrowshahi, has focused on paring the unprofitable segments of the company’s business. He has sold off its operations in Russia and Southeast Asia, where it faced heavy competition from local rivals, while expanding into potential new businesses like food delivery and bike and scooter rentals.
Wall Street investors and others are still expected to snap up Uber’s stock because it is growing quickly in a consolidating stock market with fewer IPOs. Uber’s executives have said it is profitable in cities where it has operated the longest, but chooses to burn money on increasing revenue faster.
“Revenue growth is significantly more important than worrying about the bottom line at this point,” said Barrett Daniels, a partner at Deloitte who advises on IPOs.