Uber Technologies Inc valued at 82 Billion USD after IPO shares priced at $45.
The transportation network firm, Uber Technologies Inc., founded in March 2009, offers services such as ride-hailing, and food delivery also commonly known as Uber Eats.
Uber, now valued at 82.4 billion USD, coming in lower than the anticipated figure of around 100 billion US dollars, has become both one of the biggest Initial Public Offerings (IPOs), and highly sought after stock market listing in the technology industry, following the sheer impact that the social network company, Facebook Inc., had on the Wall Street stock markets in 2012.
The transportation network company has priced its Initial Public Offering at 45 dollars a share as reported by a regulatory report which was released prior to Uber’s IPO listing on the New York Stock Exchange.
With those figures, Uber declared that it would use the 8 billion USD generated by the IPO to finance its ambitions to branch out into additional business markets and the ongoing advancements in areas such as autonomous driving cars and food delivery services.
However, Uber’s valuation of just over 80 billion USD was underwhelming, to say the least, with some experts and analysts suggesting that the lower pricing was influenced by the poor performance of Lyft, Uber’s main competitor after its initial IPO share price dropped by almost 30 percent.
“Uber Technologies, Inc. is offering 180,000,000 shares of its common stock. The selling stockholders identified in this prospectus are offering 27,000,000 shares of common stock if and to the extent that the underwriters exercise their option to purchase additional shares described below. We will not receive any of the proceeds from the sale of shares by the selling stockholders. This is our initial public offering, and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $44.00 and $50.00 per share.”
“PayPal, Inc. has entered into an agreement with us pursuant to which it has agreed to purchase $500 million of our common stock in a private placement at a price per share equal to the initial public offering price. This transaction is contingent upon certain closing conditions, including the closing of this offering and certain regulatory approvals. We have applied to list our common stock on the New York Stock Exchange under the symbol ‘UBER’.”
Click here to read the full regulatory report by the US Securities and Exchange Commission.
Uber predicts that the net proceeds from its IPO shares could total to something close to 8.5 billion USD:
“We estimate that net proceeds to us from the sale of our common stock in this offering will be approximately $8.4 billion, based on the assumed initial public offering price of $47.00 per share and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Additionally, our proceeds from the private placement to PayPal will be $500 million. We will not receive any proceeds from the sale of common stock in this offering by the selling stockholders.”
“The principal purposes of this offering are to increase our capitalization and financial flexibility and create a public market for our common stock. We intend to use the net proceeds we receive from this offering for general corporate purposes, including working capital, operating expenses, and capital expenditures. We expect to use a portion of the net proceeds we receive to satisfy a portion of the anticipated tax withholding and remittance obligations related to the settlement of our outstanding restricted stock units (“RSUs”). We may also use a portion of the net proceeds to acquire or make investments in businesses, products, offerings, and technologies, although we do not have agreements or commitments for any material acquisitions or investments at this time.”
To read the full report click here.
Uber has continued to warn that it has not and may never produce profits as stated in their investment and company report.
“We expect our Core Platform Contribution Margin to be within the range of (4)% to (7)% for the three months ended March 31, 2019. During the three months ended March 31, 2019, our Core Platform Contribution Profit (Loss) was negatively impacted by increased competitive pressures in certain markets, including the United States, as we increased our incentive and promotion spend to maintain our competitive position relative to prior periods. Our incentive and promotion spend varies widely from period to period and within various markets based on competitive dynamics and other factors. As a one-time illustration of this variance, we have calculated an estimated Core Platform Contribution Margin for our top five countries based on Gross Bookings during the three months ended March 31, 2019. The highest estimated Core Platform Contribution Margin among these countries was approximately 54%, and the lowest estimated Core Platform Contribution Margin was approximately 10%. The estimated Core Platform Contribution Margin of our top five countries based on Gross Bookings does not represent the overall performance of our Core Platform, which is managed globally.”
Therefore, with investor sentiment doubtful of Uber’s potential to generate profits, the price of each share stood at the lower end of the price range of 44 to 50 USD.
2019’s most anticipated IPO listing on the global Stock Exchange is enveloped by uncertainty and concerns surrounding the US-China trade dispute, with 25 percent tariffs on Chinese imports taking effect as of May 10th in retaliation to what US officials say is China backtracking on its trade commitments. Furthermore, the plummeting price of shares in the rival company Lyft is discouraging for investors.
The valuation of Uber’s IPO is less than forecasts made by investment bankers in 2018, but some analysts suggest that Uber reduced the asking price of its shares in fear of following the fate of rival company Lyft which saw a nose-dive in share prices.
CohnReznick’s managing partner, Alex Castelli said: “Ultimately, the success of both the Lyft and Uber IPOs will be judged based on post-IPO performance and how these companies can sustain their growth while moving toward profitability and lowering their cash burn.”
Taken from CNN.com.
Dara Khosrowshahi told investors that the future of the transportation network company goes beyond ride-hailing services and aims to move towards innovative self-driving vehicles and help to develop the transport and food industry.
“Today, Uber accounts for less than one percent of all miles driven globally. Just a small percentage of people in countries where Uber is available to have ever used our services. And we are still barely scratching the surface when it comes to huge industries like food and logistics, and how the future of urban mobility will reshape cities for the better. Building this platform has required a willingness to challenge orthodoxies and reinvent — sometimes even disrupt — ourselves. Over the last decade, as the needs and preferences of our customers have changed, we’ve changed too. Now we’re becoming something different once again: a public company.”
Taken from Bloomberg.com.
The overall performance of Uber shares traded on the first day of being listed on the Stock Exchange markets will determine and indicate how investors feel towards a transportation network company that has ambitions to venture into food delivery and driverless cars.
Regardless of the size of Uber’s aspirations for future expansion into other areas of the transportation and logistics industry, in 2018 the company ran losses of around 1.7 billion USD while profits rose to just over 11 billion USD. Uber claimed that just over 90 million citizens used Uber food and ride-hailing services and that it employs around 4 million drivers worldwide.
According to reports, Uber drivers earn an hourly wage of 10 to 12 USD, which has triggered strike protests across America. An Uber representative said: “Drivers are at the heart of our service — we can’t succeed without them — and thousands of people come into work at Uber every day focused on how to make their experience better, on and off the road. Whether it’s more consistent earnings, stronger insurance protections or fully funded four-year degrees for drivers or their families, we’ll continue working to improve the experience for and with drivers.”
Taken from VOX.com.
Approaching the IPO listing date, a variety of international businesses showed interest and invested around a total of 1.5 billion USD in Uber. These include PayPal, Toyota, and SoftBank.
Risk Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.28% of retail investor accounts lose money when trading CFDs with this provider. The information contained in this market review should not be construed in any way, as containing investment advice and/or a suggestion and/or solicitation for any trading activity and financial transaction. There is no guarantee and/or prediction of future performance. EuropeFX, its affiliates, agents, directors or employees do not guarantee the accuracy and validity of any information or data made available and assume no liability as to any loss arising from any investment based on the same. Trading Forex/CFD’s carries a high level of risk and can result in the loss of your whole investment. Forex/CFD’s are leveraged products and therefore Forex/CFD’s trading may not be appropriate for all investors. It is recommended that you do not invest more money than you can afford to lose to avoid significant financial problems in the case of losses. Please make sure you define the maximum risk acceptable for yourself.