Uber’s US$10 billion IPO set to be the largest since Alibaba’s in 2014

At around US$10 billion, Uber’s initial public offering (IPO) will be the largest IPO since Chinese e-commerce giant Alibaba Group’s IPO in 2014. The listing is also expected to be the largest this year.

Uber is said to be raising around US$10 billion worth of stock in its IPO this month. It is not yet known how many shares Uber will offer to the public, or at what price. The firm is expected to make the registration of the offering public on Thursday, sources told Reuters.

In 2014, Chinese tech firm Alibaba raised US$21.8 billion for the company and investors, pricing its stock at US$68 per share.

According to the sources, Uber has plans to kick off its investor roadshow in the final week of April and begin trading on the New York Stock Exchange in early May. Most of the shares sold would be issued by the company, while a smaller portion would be owned by Uber investors who are cashing out.

The IPO will be one Wall Street highly-anticipates, as Uber is notably one of Silicon Valley’s most closely watched companies.

San-Francisco headquartered Uber is a tech giant with more than one business vertical. In addition to its core business ride-hailing, it also runs other verticals including bike and scooter rentals, food delivery, and an expensive autonomous car business.

The tech firm’s platform connects passengers to drivers through an app and has presence in more than 70 countries and over 700 cities worldwide. According to data analytics firm Business of Apps, the Uber platform completes 15 million road trips every day.

Uber tones down valuation after Lyft’s poor debut

Given the softening global economic growth and global trade uncertainties, some tech companies timed to release their IPO in the next few weeks are looking at modest valuations rather than overprice their offerings.

The most recent valuation for Uber priced it at US$76 billion. With the IPO, the firm is said to be seeking a valuation of between US$90 billion and US$100 billion. The range is a modest valuation as some investment bankers have previously told Uber it could be worth as much as US$120 million.

According to Reuter's sources, Uber is seeking a tapered down valuation amount as it is influenced by Lyft's recent IPO.

On Monday, Pinterest set a price range for its IPO at a valuation below its private market value of US$12 billion, also because it was influenced by the weak IPO debut from Lyft.

Lyft’s IPO was priced on the top end of its IPO price range last month, which assigned it a valuation of US$24 billion in an offering that raised US$2.34 billion. However, concerns on the startup’s profitability caused the stock to trade poorly since it debuted on March 29.

Lyft had debuted at an IPO price of US$72, experiencing a momentary high on the first day of trading before sliding from then on. As of April 10, the stock was trading at US$67.44, which is 6.3% lower that its debut price.

Comparing Lyft to Uber

Investors will be comparing Uber’s soon to release IPO filing with its smaller rival Lyft’s numbers to pick apart the firm’s business and value. The IPO filing which will contain hundreds of pages of detailed information on Uber, will provide investors more details on the firm’s numbers and operations.

For now, available data show that Uber posted a revenue of US$11.4 billion last year, while gross bookings from rides were at US$50 billion. The gross bookings rose by 45% from 2017.

Lyft’s revenue in 2018 was at US$2.2 billion, with US$8.1 billion in gross ride bookings. Last year, the firm’s losses widened from a year ago to US$911 million.

It will be on Uber to convince investors that its business is more diversified, and complex as compared to Lyft’s.

Putting embarrassing scandals in the past

Uber’s chief executive Dara Khosrowshahi has been tasked with changing the company culture and business practices after numerous embarrassing scandals including allegations of bribery and sexual harassment cases over the last few years.

Investors may be interested in finding out the proceedings on how Uber is dealing with compliance and its business practices for past cases and going forward.

In August 2014, Uber faced accusations that it had booked thousands of fake rides from rival Lyft in an effort to cut into its profits and services.

Two years ago, the firm faced numerous lawsuits, including a lawsuit from Alphabet, Google’s parent, which accused it of stealing self-driving technology from Waymo.