The biggest IPO of the year is on its way.
Uber’s initial public offering, expected to value the controversial company that has transformed transportation at about $100 billion when it goes public next month, could be among the largest in history.
After making its filing with the Securities and Exchange Commission public Thursday, San Francisco-based Uber will become the third of the high-profile, Bay Area-based, money-losing unicorns — startups worth $1 billion or more — to go public this year. Its main rival, Lyft, had its IPO two weeks ago and has since seen its shares fall significantly.
Thursday, Lyft shares closed at $61.01, down 15% from their IPO price of $72. Lyft’s stock market performance so far, amid questions about whether it can become profitable, may have tempered Uber’s hopes for its IPO. In addition, digital scrapbook startup Pinterest filed for its IPO on Monday, seeking to raise as much as $1.28 billion in a public offering that could value it at about $9 billion, a drop from previous figures.
Though Uber has yet to price its stock, reports say it will be in the range of $48 to $55 a share. Its last known valuation was $76 billion, and some reports have said it was aiming for a valuation of $120 billion when it goes public.
But there are signs of slowing growth in Uber’s own business. Uber had net income of $997 million but an adjusted loss of $1.85 billion last year on revenue of $11.3 billion, according to its filing. Its ride-hailing revenue, $2.31 billion in the fourth quarter, was flat compared to the previous quarter. The company also said it expects to have significant expenses and “may not achieve profitability.” Among the tactics it will use to remain competitive will be to continue to lower its fares, which has caused grumbling among its drivers.
There have been numerous driver actions and protests around the world by both Uber and Lyft drivers. Thursday, drivers, labor activists and others planned to march from San Francisco City Hall to Uber’s headquarters to protest companies’ use of foreign tax havens.
In addition, some experts think Uber, which operates in more than 60 countries, may face more challenges than Lyft. Unlike Uber, Lyft’s operations are mostly in the United States, although it has recently expanded to a few cities in Canada.
“The impact of international markets and regulation of the ride-share industry could be significant for Uber going forward,” said Richard Clayton, research director for union pension-fund adviser CtW Investment Group.
Uber, often referred to as the world’s most valuable startup, also has faced a host of issues that are unique. A few years ago, it was embroiled in controversy, from accusations about a toxic workplace culture that tolerated sexual harassment to negative reports about its business practices, including allegations that it had spied on Lyft. At one point in 2016, it was fighting more than 70 federal lawsuits in courts across the country and had resolved at least another 60, according to a search then of a national database of federal court cases.
Those troubles eventually led to the departure of its co-founder and CEO, Travis Kalanick, and the company in 2017 brought in a new chief executive, Dara Khosrowshahi.
Khosrowshahi will be responsible for convincing potential investors during the company’s roadshow — which reportedly will get under way at the end of April ahead of a May IPO — that he has changed Uber for the better.
In its prospectus, the company says it has improved its governance, declaring “It’s a new day at Uber.” Its CEO’s letter says, in part, that “we have … made the changes necessary to ensure our company culture rewards teamwork and encourages employees to commit for the long term.”
Uber also emphasized its many bets: its Uber Eats food-delivery business, Uber Freight, its investment in e-scooters and autonomous vehicles.
As a private company, Uber has raised billions of dollars in multiple rounds of funding. According to its filing, among its biggest investors are a subsidiary of SoftBank, which owns 16.3 percent of the company, Benchmark Capital (11 percent), Alphabet (5.2 percent) and Kalanick. The ousted co-founder owns 8.6 percent of the company.
Shares of the ride-hailing pioneer will list on the New York Stock Exchange under the ticker “UBER.”
Uber’s public offering likely will compete with Alibaba for the biggest tech IPO ever. The company’s debut also would dwarf Facebook’s as the No. 1 IPO by an American tech company. The social networking company raised $16 billion at an $81 billion valuation in 2012.
A couple of other local, less well-known tech companies also have filed to go public or have gone public in recent days: San Jose-based Zoom and San Francisco-based PagerDuty.