Uber sets course for IPO, but prospectus shows slowing growth

Uber sets course for IPO, but prospectus shows slowing growth

Troy Powers
April 15, 2019

Uber's operating loss was $3bn previous year, while revenue slowed at $11.3bn, according to documents filed with the US Securities and Exchange Commission.

Meanwhile, Uber Freight brought in $125 million in revenue in the fourth quarter and last month the company announced it would be expanding to Europe creating room for further growth.

Uber Eats received orders from 15 million customers last year with revenue jumping 149% last year to $1.46bn and the firm sees restaurants and other delivery services just as much competitors for customers as taxi services.

The San Francisco company also disclosed a legal cloud hanging over its head as government authorities and regulators investigate whether the company broke any laws.

The firm reported an adjusted loss before interest and tax of $1.9bn for 2018, 15 per cent down on the year before, but it could still pose a challenge to investors trying to figure out the company's value in public markets.

"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. Yet the falling share price of Lyft, the app-based transportation network, after its flotation in the United States last week has highlighted the dangers of ploughing money into new issues.

Uber said it intends to give bonuses to qualified motorists and is setting apart an additional part of its inventory for drivers to buy.

Uber released its IPO filing, and it is seeking to raise $1 billion.

"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. "That is an indication that'll be looked on positively in the upcoming few weeks". Lyft's stock now is currently hovering around $61down from the IPO price of $72.

The rocky beginning might have prompted Uber to tamp down its IPO aspirations. That's below estimates of $120 billion.

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Although Uber has not announced its official price range per share, the company has already raised nearly $20bn in investment rounds, totaling Uber's valuation at nearly $120bn.

The company is on track to price its IPO and begin trading on the New York Stock Exchange in early May.

In the end, Uber is broadly expected to be the largest tech IPO since Chinese e-commerce giant Alibaba Group went public in 2014. And it is very likely to be the biggest among USA tech firms because Facebook took its bow on Wall Street seven decades ago in a time when most people hadn't ever considered using an app on their smartphone to muster a ride from strangers driving their own cars.

Uber launched as a vehicle service where customers are able to hail drivers with a couple taps on a smartphone as UberCab, in 2009.

And the company is investing heavily in businesses in areas such as food delivery and scooters. The setbacks have contained allegations and uncontrolled inner sexual harassment it destroys automobile technology.

The blowback from the problems helped Lyft pick up ground in the USA - something Uber acknowledged in its filing - and led to the ouster of Uber co-founder Travis Kalanick as CEO in 2017.

In addition to answering questions about Uber's finances, CEO Khosrowshahi will be tasked with convincing investors that he has successfully changed the culture and business practices after a series of embarrassing scandals over the last two years.

A subsidiary of Softbank, cayman, is Uber shareholder with 16 percent. But in 2017, it has more than doubled compared to 2016.

However, it frozen testing when a year ago one of its vehicles that were self-driving struck and killed a pedestrian at Arizona. The company resumed testing self-driving vehicles in Pittsburgh in December.

Daniel Ives of Wedbush Securities noted that the ride-hailing firms will face competition from other autonomous driving firms including the former Google vehicle unit Waymo. Additional regulation of our pricing model could increase our operating costs and adversely affect our business.