After extraordinary growth—along with public scandals—Uber is about to go public. But amid the hype are real concerns about its profitability.
Topline: After launching a decade ago and becoming a household brand (and the source of public dysfunction and scandal), Uber makes its IPO debut Friday in one of the most anticipated and highly valued IPOs in history. But Uber hasn’t been able to turn a profit, which concerns some on Wall Street.
Pricing: Uber will price its shares from $44 to $50, which is at the midpoint or below its original target, the Wall Street Journalreported, citing a source familiar with the matter.
Valuation: With shares priced at $44 to $50, the company would be valued at $80 or $90 billion.
While the IPO is set to be one of the most valuable for Silicon Valley this year, Uber has lowered its valuation since announcing its intention to go public. Bankers originally pegged the company’s valuation at up to $120 billion, but adjusted after rival Lyft’s shares fell below their IPO price.
Should you buy? Most advise would-be buyers to pass on purchasing shares on IPO day because large institutional investors can pocket money and know exactly when to sell off shares, leaving individual investors in the dust.
Warren Buffet even said he’s not buying Uber stock because he rarely buys IPOs.
Concerns about profitability: Uber is losing more than $1 billion a year. In its S-1 filing, the company conceded it may never be profitable. But those betting on Uber aren’t thinking about the short term. Some analysts believe Uber’s potential doesn’t come from its core ride-hailing service. Instead, UberEats, UberFreight and its autonomous car efforts may be money-makers down the road. UberEats, for example, produced $1.5 billion in revenue in 2018.
Driver complaints: Uber and Lyft drivers made a huge statement Wednesday ahead of Uber’s IPO by organizing a global strike to demand higher wages.
