Views on Uber's IPO

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As Uber prepares for its IPO roadshow with investors next week, below are selected views from the company and several business media outlets.

  • Uber Technologies, Inc. Prospectus: “Our mission is to ignite opportunity by setting the world in motion ….

  • "We revolutionized personal mobility with Ridesharing, and we are leveraging our platform to redefine the massive meal delivery and logistics industries.

  • "While we have had unparalleled growth at scale, we are just getting started: only 2% of the population in the 63 countries where we operate used our offerings”

  • What's Missing From Uber's IPO” (Fortune): "Uber’s valuation has become anyone’s guess. It’s a big company with lots of customers, two growing lines of business (Uber Eats and Uber Freight), and an enviable collection of autonomous-vehicle scientists said to be hived off as a separate unit that will attract massive investment capital from automakers caught without their own critical mass of PhDs.

  • "What Uber doesn’t have is profits or growth. And that’s not good. If Uber doesn’t make money and it’s not growing, it’s almost impossible to say what it’s worth. Just because it now thinks it can raise billions at an implied total value of $80 billion to $90 billion, and just because supposed smart money most recently invested at $76 billion, means nothing.

  • Financial Times: “Uber’s conservative pricing could rise following meetings with investors as it approaches next month’s listing, but it follows an underwhelming stock market debut by rival Lyft, which is trading more than 20 per cent below its issue price …

  • "The pace of ride-hailing revenue growth has slowed in recent months due to competitive pressures to subsidies fares and reward drivers.
     

  • Uber Aims for $84 Billion Valuation in Year’s Largest IPO” (Bloomberg): “In 2018, Uber lost $3.04 billion on an operating basis on revenue of $11.3 billion, bringing total operating losses over the past three years to more than $10 billion, according to earlier filings. The company reported a net income of $997 million for 2018.

  • "The profit was mainly driven by Uber’s sale of assets in Southeast Asia and Russia as well as an increase in the estimated value of its stock in Didi Chuxing, China’s largest ride-hailing company, which Uber sold its Chinese business to in 2016.

  • Uber’s IPO Gift to Drivers Comes with a Catch” (Barron's):  The ride-hailing service …  said it will be giving out “Driver appreciation awards” of up to $40,000 …

  • "Drivers will only get the maximum $40,000 if they have completed a remarkable 40,000 rides on behalf of the company. Others will get lesser awards starting at $100. In total, it will pay $300 million to about 1.1 million drivers, for an average of about $273 per driver.
     

OUR TAKE

  • Regarding Uber’s valuation: Factors that help determine a stock's value include: 1) the company's growth dynamics, 2) management’s vision and its ability to execute, 3) the performance of competitors, 4) the mood of investors and 5) the stability of financial markets. 

  • Regarding Uber's lack of profitability: Going forward, investors will increasingly focus on the firm's ability to "redefine the massive meal delivery and logistics industries".

  • Regarding the ride-sharing market: Uber, Lyft and other ride-sharing services provide an appealing transportation alternative for their riders. Competition will likely continue to increase - driven by new business models and new technologies.

  • Regarding ride-sharing driver compensation: The independent contractor status of drivers is being challenged by courts and government agencies around the world. These actions may have broad implications for the cost structure and economic models of ride-sharing firms.  

FPM Team