Uber looks to raise up to $9B in its IPO

Chicago Tribune (Sunday) - - INVESTING - By Cathy Busse­witz

NEW YORK — Rideshar­ing giant Uber is aim­ing to raise $9 bil­lion in its mam­moth ini­tial pub­lic stock of­fer­ing that, while smaller than ini­tially ex­pected, still dwarfs most stock mar­ket de­buts.

The San Fran­cis­cobased com­pany ex­pects to be val­ued at $80.5 bil­lion to $91.5 bil­lion, fall­ing well be­low prior es­ti­mates that rose as high as $120 bil­lion, in a sign that in­vestors may be tak­ing a more cau­tious ap­proach to ride-shar­ing af­ter the stock per­for­mance of Uber’s ri­val, Lyft.

Even so, Uber is on track for one of the larger IPOs in his­tory. The com­pany plans to sell 180 mil­lion shares for $44 to $50 each.

Lyft went pub­lic last month and its stock price fell 21% from its ini­tial of­fer­ing price of $72, and closed at $57.24 Fri­day.

“With Lyft’s IPO be­ing down more than 20% 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 so-called 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 $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 $8 bil­lion in losses over a decade. That mir­rors Lyft’s chal­lenges.

But Uber also showed im­pres­sive growth. Its rev­enue to­taled $11.3 bil­lion in 2018, which was a 42% in­crease from $7.9 bil­lion in 2017, and far above its $495 mil­lion in rev­enue in 2014.

That rapid growth has con­tin­ued this year. On a pre­lim­i­nary ba­sis, rev­enue rose to a range of $3 bil­lion to $3.1 bil­lion dur­ing the three months that ended March 31, com­pared with $2.6 bil­lion a year ago.

How­ever, the com­pany es­ti­mated losses of $1 bil­lion to $1.1 bil­lion for the first quar­ter. Uber chalks them up to op­er­a­tional ex­penses as the com­pany con­tin­ues to in­vest in its core plat­form, in­clud­ing spend­ing on in­cen­tives and pro­mo­tions.

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.

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