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Daily Trends Now


Uber files to go public as losses mount

Uber files to go public as losses mount

Uber will follow Lyft Inc in going public.

Uber officially filed for an initial public offering on Thursday. It is 285 pages, plus 83 more of financial statements. The company is expected to try to raise roughly $10 billion and seeks a market value of $90 billion to $100 billion, according to the Wall Street Journal.

The company posted a profit of $997 million a year ago, but that doesn't mean its ride-hailing service suddenly started to make money - far from it.

For the Uber optimists, there was plenty to like.

Uber's revenue totaled $11.3 billion in 2018, a 42 per cent increase from $7.9 billion in 2017. This is not a hypergrowth company anymore, at least not in its biggest business of rides on-demand. At the end of 2018, Uber Eats, its most talked-about business, had gross bookings of $2.6 billion.

To Uber's credit, it is firing off a cannon-sized number of metrics at investors.

"Some of the attributes that made Uber a wildly successful startup - a fierce sense of entrepreneurialism, our willingness to take risks that others might not, and that famous Uber hustle - led to missteps along the way", Khosrowshahi wrote, closing his letter by assuring he will run Uber with integrity. Uber, however, posted an adjusted EBITDA loss of $1.85 billion in 2018.

The overall message: Uber is complex.

Uber filed with an initial offering amount of $1 billion, typically a placeholder amount used to calculate fees that will change.

"There's no discernable way these companies are valued". Growth in the value of transactions from rides slowed to 25 percent in the fourth quarter of 2018 from 44 percent in the early part of the year.




"They're showing that they're capable of controlling their costs, which has been a concern of ride sharing companies in general", said SharesPost analyst Alejandro Ortiz.

Since its launch in 2009, it has aimed for global dominance of the ride-hailing industry through a cash-burning strategy of investor-subsidised fares and expanded its business in recent years to include food delivery, self-driving vehicles and alternatives to auto transport such as bikes and scooters. The ride-hail company has also put a lot of investment into building out its brand beyond taxi services. This company is everything and everywhere. "While we have had unparallelled growth at scale, we are just getting started".

But the prospectus renewed questions about how sustainable Uber's business actually is.

Uber also engages in some sleight of hand about the ties connecting all its businesses.

Most of the shares sold would be issued by the company, while a smaller portion would be owned by investors cashing out, one of the sources said.

Uber has 91 million users, but growth is slowing and it may never make a profit, the ride-hailing company said in the filing.

Uber is reserving some shares in the IPO for drivers who have completed 2,500 trips among other criteria.

The world's largest taxi-hailing company revealed that it made a $3 billion operating loss a year ago as it published the prospectus for its initial public offering (IPO).

"We will not shy away from making short-term financial sacrifices where we see clear long-term benefits."
It's also the most important sentence about Uber. That is an odd thing to say for a company that has been unprofitable for 10 years.

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