Uber IPO: Financials, growth, position and regulations… What to know before Uber goes public

With an estimated company valuation of around $100 billion, Uber could be the largest IPO in U.S. market history. Benzinga reported that, unfortunately for retail investors who do not get shares at the IPO price, history hasn’t been kind to large tech IPOs. Eight of the ten largest tech IPOs in history declined between 25 and 71 percent in the year following their first day of trading. The most recent example of a high-profile tech IPO bust is Snap, Inc. Snap closed its first day of trading in March 2017 at a price of $24.48. Roughly two years later, Snap shares are now trading at $11.44.

Is Uber IPO worth buying?

According to CNBC, Uber’s eye-popping $120 billion valuation would make it worth more than Nvidia, 3M and PayPal. Proposals for the ride-hailing IPO would reportedly value Uber at $120 billion as a public company. At that valuation, its market value would be bigger than profitable, established companies like Nvidia, Amgen and 21st Century Fox. Uber lost more than $1 billion last year.

Last year it managed to stem some of the bleeding. Its adjusted losses slowed by 15 percent, to $1.8 billion, according to Uber’s self-reported financials published in February. In 2017, Uber lost $2.2 billion. The company increased its revenue, though at a slower pace than in the previous year. Full-year revenue last year was $11.3 billion, up 43 percent year over year.

CBInsights, The 2019 Tech IPO Pipeline

Here Chris Neiger of Motley Fool summarizes some critical points:

Uber’s financials, in a nutshell
Uber recently disclosed some financial data showing that revenue grew 43% year over year to $11.3 billion in 2018. Additionally, the company’s gross bookings for the full year (what Uber makes before it pays its drivers) reached $50 billion, up 45% from 2017.

What’s impressive about this growth is that the company’s losses are slowing. Uber’s losses totaled $1.8 billion last year, down from $2.2 billion in 2017. Significant losses at this stage for a fast-growing company aren’t unusual. For example, Uber’s biggest rival in the United States, Lyft, had a net loss of $911.3 million last year on revenue of just $2.1 billion.

It’s worth mentioning, however, that Uber’s sales are slowing on a sequential basis. In the fourth quarter of 2018, sales were up 25% year over year, but that’s not as strong as its 38% increase in the third quarter. Investors only have a snapshot of Uber’s financials to consider, but the slowdown might not be too much to worry about, especially when considering that in the most recently reported quarter, gross bookings jumped 37% to $14.2 billion.

Uber’s key growth opportunities
Uber isn’t content to only be a ridesharing company. In fact, about 13% of the company’s sales in the third quarter of 2018 came from its food delivery service, Uber Eats. This business is likely to become an increasingly important part of Uber, and the company contends that it is the “largest online food-delivery business outside of China, based on gross bookings.” But according to a third-party analytics firm, DoorDash surpassed Uber Eats in U.S. sales toward the end of 2018.

Can Uber continue to defend its market position?
There’s no denying that Uber is a ridesharing leader in the U.S. with virtually 60% of the market (Lyft takes up the rest). With operations around the world, Uber has already made huge gains building out its brand.

Uber will continue to face regulation and lawsuits
All large companies face the specter of regulations and lawsuits, and Uber has had its fair share as a young company. The attention it garners likely won’t decrease with a public filing.

Uber IPO Coming: When Will Uber Launch IPO? Uber Is Expected To File S-1 In April 2019

2019 Tech IPOs: Is Uber IPO Worth Buying? Will It Be A Good Investment? Eight of the Ten Largest Tech IPOs Lost Value! Tech IPO’s might be a little risky if you look back to the examples. Uber is planning to file S-1 in April 2019. The valuation is expected to be $120B.

When will Uber IPO happen?

Reuters Reports Uber IPO Date: According to Reuters, Uber is planning to kick off IPO in April 2019. Uber will issue its required public disclosure, known as an S-1, and launch its investor roadshow in April. Uber’s revenue last year was $11.3 billion, while its gross bookings from rides were $50 billion. But the company lost $3.3 billion, excluding gains from the sale of its overseas business units in Russia and Southeast Asia. Lyft’s revenue for last year was $2.2 billion, with $8.1 billion in gross ride bookings. The company lost $911 million.

Is Uber IPO a good investment?

Investors previously considered that investing in Uber’s upcoming IPO would make a more profitable and more reliable investment with significantly mitigated risks in oppose to its “smaller” competitor, Lyft, it now appears that there are more than several reasons why Lyft IPO may beat Uber initial offering in the long run.

Uber IPO forecast

Eight of the ten largest tech IPOs in history declined between 25 and 71 percent in the year following their first day of trading. The most recent example of a high-profile tech IPO bust is Snap, Inc. Snap closed its first day of trading in March 2017 at a price of $24.48. Roughly two years later, Snap shares are now trading at $11.44.

Pymnts.com reported that, while ridership was on the incline, and Uber reported $50 billion in total bookings for ridesharing and food delivery for the final quarter of the year, revenue growth came in at only 2 percent between Q3 and Q4. In January, it was reported that Uber’s valuation, when it goes public, is likely to be $14 billion less than its most recent private valuation.

The challenge for Uber going forward, according to David Brophy, professor of finance at the University of Michigan’s Ross School of Business, is its losses. This, he noted last month to pymnts.com, gives investors pause around whether or not Uber will ever be able to stop subsidizing some markets enough that it can actually put the firm in the black.

“Uber needs to show it can control costs and can make money — basically provide a strong argument that its business model is not broken, and that it can achieve and sustain profitability despite issues with drivers, customers and politicians,” he said.

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.
Aamir Kapoor is a fintech writer specializing in cryptocurrency and blockchain. He has a background in finance and banking and was a researcher.