Uber 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 stumbles in its early days of trading as a public company, Wall Street Journal reported.
Uber recently provided documentation to holders of its convertible notes that sets a potential price range of $48 to $55 a share, according to people familiar with the matter. 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 adds.
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.
CEO Dara Khosrowshahi says Uber is on track to go public later this year, a move that could make it the biggest IPO of 2019. WSJ’s Jason Bellini breaks down five ways Uber is preparing itself for its market debut. Illustration: Laura Kammermann
The current expectations fall below the valuation of as much as $120 billion that Morgan Stanley MS 0.43% and Goldman Sachs Group Inc., GS 1.18% the lead underwriters, had pitched as a possible public offering price tag last year.
Likely contributing to Uber’s decision to take a conservative tack on valuation is the disappointing debut of smaller rival Lyft, which went public at $72 a share late last month.
That price was well above Lyft’s last private funding round and higher than the initial range targeted by the company and its underwriters. But after spiking on its first day of trading, the stock has been buffeted by waves of selling. On Wednesday, Lyft shares fell 11% to $60.12, hurt in part by news of Uber’s valuation expectations, the Journal notes.
Uber officials and their underwriters are eager to avoid such an outcome, according to people familiar with their thinking. The company is seeking to set the stock up for an initial trading pop and to attract a variety of long-term investors, the people said.
With a raft of highly valued technology startups planning to go public this year, analysts and bankers have said 2019 could be a record-breaker in terms of money raised. Uber’s IPO is the biggest one in a pipeline that, following Lyft, includes Pinterest Inc. and Slack Technologies Inc., the operator of a popular workplace instant-messaging and collaboration app.
But, in another sign that companies coming to the market have reined in their ambitions a bit, Pinterest this week began its investor roadshow with an initial price range below where the online image-search provider last raised money privately. Pinterest shares are expected to start trading next week.
The circumstances remain nearly ideal for a strong IPO market, with stock prices broadly elevated and volatility low. Another key factor: Shares of companies that have gone public in recent years have by and large performed well as investors clamor for a piece of big tech companies with strong growth prospects. But IPO markets are fragile, and momentum can quickly fade, the Journal writes.
Uber is expected to make its IPO filing public Thursday, with the stock’s debut planned for early May. While the filing won’t likely include the targeted valuation, it will reveal additional details of the company’s business and its results. Uber, which is more expansive than Lyft – both in terms of geographic scope and number of business lines – has said it lost $3.3 billion last year, excluding a one-time gain, on revenue of $11 billion.