A Comprehensive Overview of the Uber IPO: Is a Valuation of $91 Billion Realistic?

May 9, 2019 12:39:42
  • While the Uber IPO valuation has fluctuated since the very first announcement, it’s still at an astronomically high level and could increase further depending on investor interest
  • Uber’s pre-IPO roadshow is highlighting the multiple opportunities and growth potential within the transportation industry
  • The company’s May 10 IPO is anticipated to be one of the biggest in tech history

Uber Technologies Inc.’s expected (anticipated ticker symbol NYSE: UBER) May 10, 2019, IPO is one of the most highly anticipated offerings of 2019. While the valuation has been modified several times over the course of the previous months, the IPO will likely be the largest of the year and one of the biggest in the tech sector since Alibaba Group Holding Limited (NYSE: BABA) went public in 2014.

An Extensive New York Times analysis sheds more light on the key parameters of the Uber IPO (http://nnw.fm/H4g8l). While the predicted valuation has gone down from $120 billion in the fall of 2018 to $91 billion in the first days of May 2019, Uber’s roadshow could contribute to an eventual increase. The response of investors toward the pitch is of paramount importance.

Uber relies on Morgan Stanley and Goldman Sachs to lead the offering. The company is currently investing heavily in diversification to branch out into further transportation fields. This is one of the primary highlights of the Uber pitch. Currently, Uber is the leader on the ride-hailing market, but the company is continuing to spend more on other aspects of transportation service provision ($14.3 billion spent over the course of 2018).

In 2018, Uber’s profit reached $997 million, while revenue growth slowed down from a nearly two-fold annual increase in 2017 to 42 percent in 2018 ($11.3 billion). These numbers further clarify the need for Uber to position itself as a leading platform in the transportation field, capable of creating a market need and providing a diversified range of services.

Uber operates in over 60 countries and more than 700 cities across the world. Each day, Uber drivers complete more than 15 million trips. As 2018 data suggests, the Uber ride-hailing business has over 91 million monthly users, but the annual growth in new customer acquisitions has slowed down.

The good news is that some of the company’s side initiatives have demonstrated significant growth potential. Uber Eats, the company’s food delivery service, saw its revenue nearly triple in 2018 to reach $1.5 billion. The Uber Freight trucking business is another opportunity to watch, analysts suggest.

Since the company’s primary business has reached a plateau, investors will now have to look forward to the development and establishment of new niches. Such initiatives aren’t lacking, and they could potentially contribute to Uber becoming a multi-faceted transportation giant in the years to come.

In a letter accompanying the IPO prospectus, the company’s management stated, “What began as ‘tap a button and get a ride’ has become something much more profound: ridesharing and car-pooling; meal delivery and freight; electric bikes and scooters; and self-driving cars and urban aviation.”

The letter does acknowledge the challenges that Uber has and is still facing, but it also makes light of the opportunities that the company possesses. “Uber is a once-in-a-generation company, and the opportunity ahead of it is enormous,” the letter reads.

For more information, visit the company’s website at www.Uber.com

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