Uber Technologies Inc. “is aiming for a valuation in its impending initial public offering of as much as $100 billion, below previous expectations, as ride-hailing competitor Lyft Inc. LYFT 1.48% stumbles in its early days of trading as a public company,” the Wall Street Journal reported.
The company recently shows papers to holders of its convertible notes that set a possible price range of between $48 and $55 a share. “That would equate to an aggregate valuation of between $90 billion and $100 billion, including the roughly $10 billion Uber expects to raise in the offering,” the Journal noted. “By the time the San Francisco-based company begins marketing the shares to investors later this month, the range is likely to narrow and could shift, some of the people said.”
Some are wary. The headline in the New York Times read soberly, “Uber, Losing $1.8 Billion a Year, Reveals I.P.O. Filing.” As the story that followed explained, “… the prospectus renewed questions about how sustainable Uber’s business actually is. The company said in the filing that it lost $1.8 billion in 2018, excluding certain transactions, on revenue of $11.3 billion. And the prospectus also showed that its rocket-ship trajectory for revenue growth was beginning to slow.”
Competitor Lyft went public in March with a valuation of $24 billion. “But Lyft, which is also deeply unprofitable, fell below its offering price in its second day of trading as investors questioned whether it could make money. This week, Pinterest, the digital pin board company that also is losing money, set a price range for its public offering that values it below that of its last private market peg,” the Times added.
“We will not shy away from making short-term financial sacrifices where we see clear long-term benefits,” Dara Khosrowshahi, Uber’s chief executive, wrote in a letter accompanying the prospectus.
Commented Bloomberg, “That is an odd thing to say for a company that has been unprofitable for 10 years. It’s also the most important sentence about Uber. This company — already huge and built with billions of dollars in investors’ cash — has no choice but to keep investing and to jump-start growth in its sprawling empire.”
Uber’s founder’s letter, penned by CEO Dara Khosrowshahi, reads in part: “Taking this step means that we have even greater responsibilities — to our shareholders, our customers, and our colleagues. That’s why, over the past 18 months, we have improved our governance and Board oversight; built a stronger and more cohesive management team; and made the changes necessary to ensure our company culture rewards teamwork and encourages employees to commit for the long term.”
By Pat Savage
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