Uber Plans to Go Public
High-valued private companies are intriguing. And they're even more intriguing to us investors when they're in talks to go public.
The popular ride-hailing app Uber is rumored to be preparing for its initial public offering (IPO).
Uber is one of the most valuable privately held firms in the world. Its recent funding round has given the company a value of more than $100 billion. That's a huge increase from its last reported valuation of $72 billion. Japanese carmaker Toyota recently funded Uber with $500 million in capital. And that helped give Uber a valuation of more than $100 billion.
Getting Ready to Go Public
Last month, Uber CEO Dara Khosrowshahi said the company is on track to launch its IPO in 2019 and has no plans to sell Advanced Technologies Group.
Over the past year or so, Uber has had a difficult time with navigating unflattering news about the company. That includes news about its previous CEO, Travis Kalanick, and how employees are treated in the company and its workplace. But with new CEO Khosrowshahi, it seems like the company is headed in the right direction, especially now with its IPO.
An Uber IPO could be one of the largest in history.
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According to data from Dealogic, almost 200 companies have raised more than $53 billion from IPOs in the American markets in 2018. And that makes this the busiest year for tech newcomers to Wall Street since 2014. Tech IPOs have surged in 2018. And that trend could continue into 2019.
What Would an Uber IPO Look Like?
Investors and banks are optimistic about Uber's potential IPO and how much money it could raise. But there are still some things that need to be pointed out. Uber's valuation is high, but investors need to pay attention to its financials.
The company hasn't reported net revenue for more than three years. This year, it's expected to generate between $10 billion and $11 billion in net revenue. So, we'll have to see if that happens when the 2018 financial year comes to a close.
A high-valued tech company doesn't necessarily mean that it'll survive the public market. Take a look at Snap Inc. Most people knew about the tech startup before its IPO because of its Snapchat app. But when it came to its IPO, it didn't do as well as expected. And as of Thursday, October 18th at 3 p.m., its stock was trading at only $6.84. That's a 59% decrease from its IPO price of $17.
Just because you have the brand recognition and are popular with banks doesn't mean you'll survive the market. A company needs growth and plans for future growth. Not to mention, steady financials, which means that the company has to be generating some type of revenue to stay afloat.
Uber has some work cut out for it before it can make its market debut. But that doesn't mean it can't have a successful IPO. I'm only saying it'll have to focus on building up its financials and proving to investors that it'll be around for years to come.
Until next time,
Editorial Director, Park Avenue Digest