Uber unveils IPO with warning it may never make a profit

Oscar PerryApr 14, 2019

The ride-hailing company on Thursday filed with the US Securities and Exchange Commission for its initial public offering. Here are five things we learned from it.

Image sharing app Pinterest Inc this week also set the terms for its IPO which would value the company at up to $11.3 billion, below its latest fundraising round which valued it at $12 billion in 2017.

In one of the most awaited IPOs of the world, San-Francisco based ride-hailing giant Uber announced what could be one of the biggest IPOs of all time. Uber completes more than 15 million trips a day.

But it let Lyft go first with its offering, partly because it was working on a new private fundraising round for its autonomous driving unit.

That means Uber Eats food purchases, which accounted for 18 percent of Uber's total transactions in the fourth quarter, plus the still relatively tiny business from Uber's rented bicycles and scooters and its work as a middleman for freight deliveries - which combined were less than one percent of total transaction value.

Uber would be the largest initial public offering since that of Chinese e-commerce company Alibaba Group Holding Ltd in 2014, which raised $25 billion.

Barely two weeks into its life as a public company, Lyft Inc. shares have been sliding fast with bigger rival Uber Technologies Inc. breathing down its neck. Uber, however, posted an adjusted EBITDA loss of $1.85 billion in 2018.

Uber said in its filing its ridesharing position in the United States and Canada was "significantly impacted by adverse publicity events" and that its position in many markets has been threatened by discounts from other ride-hailing companies.

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"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 will list on the New York Stock Exchange using the ticker symbol UBER.

"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.

The pressure to become profitable will ratchet up once these companies become public, said Jordan Stuart, a portfolio manager for Federated Kaufmann funds who often purchases companies' stock in the IPO.

Uber said it plans to give bonuses to qualified drivers and is setting aside an undisclosed portion of its stock for drivers to buy.

Uber's single largest shareholder isn't the company's founder or even the venture capital firm that was Uber's earliest investor.

- Alphabet, Google's parent company, owns 5.2%.

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