Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Uber unveils IPO with warning it may never make a profit

Stock MarketsApr 11, 2019 11:50PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A photo illustration shows the Uber app on a mobile telephone, as it is held up for a posed photograph, in London

By Joshua Franklin

NEW YORK (Reuters) - Uber (NYSE:UBER) Technologies Inc has 91 million users, but growth is slowing and it may never make a profit, the ride-hailing company said on Thursday in its IPO filing.

The document gave the first comprehensive financial picture of the decade-old company which was started after its founders struggled to get a cab on a snowy night and has changed the way much of the world travels.

The S-1 filing underscores Uber's rapid growth in the last three years but also how a string of public scandals and increased competition from rivals have weighed on its plans to attract and retain riders.

The disclosure also highlighted how far Uber remains from turning a profit, with the company cautioning it expects operating expenses to "increase significantly in the foreseeable future" and it "may not achieve profitability."

Uber lost $3.03 billion in 2018 from operations.

The filing with the U.S. Securities and Exchange Commission revealed Uber had 91 million average monthly active users on its platforms, including for ride-hailing and Uber Eats, at the end of 2018. This is up 33.8 percent from 2017, but growth slowed from 51 percent a year earlier.

Uber had not disclosed the latest user numbers before, and the figure indicates the scale of the business. Although its user base includes customers of other services and ride-sharing, the number is nearly five times the 18.6 million announced by rival Lyft Inc (NASDAQ:LYFT).

Uber in 2018 had $11.3 billion revenue, up around 42 percent over 2017, but below the 106 percent growth the prior year.

Uber set a placeholder amount of $1 billion but did not specify the size of the IPO. Reuters reported this week that Uber plans to sell around $10 billion worth of stock at a valuation of between $90 billion and $100 billion.

Investment bankers had previously told Uber it could be worth as much as $120 billion.

Uber would be the largest initial public offering since that of Chinese e-commerce company Alibaba (NYSE:BABA) Group Holding Ltd in 2014, which raised $25 billion.

Although Uber is no longer targeting a $120 billion valuation in the IPO, some stock bonuses to Chief Executive Dara Khosrowshahi and other company executives are only triggered when that valuation is reached.

Uber will follow Lyft in going public.

Shares in its smaller rival closed at $61.01 on Thursday, 15 percent below its IPO price set late last month, a development which has sent a chilling signal for other tech start-ups looking to go public.

After making the public filing, Uber will begin a series of investor presentations, called a roadshow, which Reuters has reported will start the week of April 29.

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

ADVERSE EVENTS

Uber faces questions over how it will navigate any transition toward self-driving vehicles, a technology seen as potentially dramatically lowering costs but which could also disrupt its business model.

Last year, the ride-hailing giant settled a legal dispute over trade secrets with Alphabet (NASDAQ:GOOGL) Inc's Waymo self-driving vehicle unit.

Waymo, in its lawsuit, had said one of its former engineers who became chief of Uber's self-driving car project took with him thousands of confidential documents.

Uber revealed in the filing it could have to pay a license fee to Waymo or face a substantial delay to the development of its self-driving technology if the initial assessment of its technology by an independent expert is confirmed.

The expert, installed as part of Uber's settlement with Waymo, has identified on an interim basis certain functions in Uber's autonomous vehicle software that "are problematic and other functions that are not," Uber said.

A Waymo spokesperson said: "This review is on-going and we will continue to take the necessary steps to ensure our confidential information is not being used by Uber."

One advantage Uber will likely seek to play up to investors is that it is the largest player in many of the markets in which it operates. Analysts consider building scale crucial for Uber's business model to become profitable.

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.

Those have included sexual harassment allegations, a massive data breach that was concealed from regulators, use of illicit software to evade authorities and allegations of bribery overseas. Khosrowshahi joined Uber in 2017 to replace company co-founder Travis Kalanick who was ousted as CEO.

Uber said in its filing its ridehailing position in the United States and Canada was "significantly impacted by adverse publicity events" and that its position in many markets has been threatened by discounts from other ride-hailing companies.

A #DeleteUber campaign surged on social media in 2017 after a public relations crisis, which Uber said in its filing meant hundreds of thousands of consumers stopped using its platform within days.

Uber said its market share fell in most regions last year, although the rate of decline has slowed. The company claims more than 65 percent market share in the United States and Canada, versus Lyft's stated 39 percent in the United States.

Uber is reserving some shares in the IPO for drivers who have completed 2,500 trips among other criteria.

Uber unveils IPO with warning it may never make a profit
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (8)
my name
my name Apr 12, 2019 9:57AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The point of rideshare is to share your ride when you're already going somewhere, not to try to make it a job.  That's just stupid and defeats the whole purpose of ride sharing.  For it to work the passenger needs to pay a little more than the bus.  And the driver needs to receive a little more than the fuel cost.  The price has to be very reasonable.  So drivers can't go out of their way to pick up or drop off passengers!
Brady Murray
Brady Murray Apr 11, 2019 9:47PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Sounds like buyong stock in the USPS. You cant change the culture of a workforce that you do not interact with. God only knows who you have working for you.
Gold Fever
Gold Fever Apr 11, 2019 9:26PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
In US, drivers barely make minimum wage and many lose money when they factor in their REAL vehicle expenses. Only winner here is the riders when they are not r aped or k illed.
George Jetson
George Jetson Apr 11, 2019 9:18PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
uber issues that they will not pay dividends. HA!
Michael Angelo
Michael Angelo Apr 11, 2019 7:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This company like many are what they called zombie companies. Are the product of the great low interest rate madness we being living the last 10 years. Still we are listening from the genius (everywhere specially in WH) that need cheaper rates and more toxic assets. Now imagine if all these companies have to go to normal, is that capitalism or another way of corporate socialism. The worst is that there're countries in the same condition or why US or Japan cannot survive one interest rate point. Banks and financial angels are financing these to the end otherwise must account the lost. The big recession was nothing compare with this madnessGood luck.
Brady Murray
Brady Murray Apr 11, 2019 7:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
this isn't even comprehensible
Fábio Gomes
Fábio Gomes Apr 11, 2019 6:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
These financials are toxic, who buys this???
M.N. Youshei
M.N. Youshei Apr 11, 2019 5:47PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Why would anyone invest in a company that may never be profitable? And probably won't be. They're so worried about competition they don't focus on making money.
Ji Go
Ji Go Apr 11, 2019 5:47PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
One word: Amazon.
Chrismeister Mitrou
TheChrismeister Apr 11, 2019 4:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
this company is bleeding money from its eyes.. how will they turn this around?
ronald blackledge
ronald blackledge Apr 11, 2019 4:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
will merge with lyft
Ji Go
Ji Go Apr 11, 2019 4:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
They can issue the ipo and then buy lyft’s float with the proceeds!!
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email