This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
On the heels of rival car sharing service Lyft filing for an IPO, Uber has announced that it has filed paperwork with the US Securities and Exchange Commission (SEC) for an initial public offering (IPO). The IPO is one of the most highly anticipated of 2019.
Uber’s rocky path to an IPO
Uber will be one of the most valuable companies when it goes public, with a valuation of $120 billion. The car sharing app is one of the most successful companies in history. However, the business reported $1 billion in losses in its third quarter (Q3) earnings. The debt is mostly caused by investments in its scooter and Eats divisions, but investors may be nervous about whether the corporation will remain profitable.
In addition to its financial troubles, the company has had problems with accusations of sexual harassment from female employees. Uber has promised to change its sexist ‘tech bro’ culture to be more inclusive of women. The chief executive officer (CEO) at the time of the allegations, Travis Kalanick, resigned. He was replaced by, Dara Khosrowshahi, who has made sweeping changes to help change the corporation’s image.
How the two rideshare IPO’s may compare
While Uber is the dominant company, Lyft may have an advantage in its race to go public. A recent survey from investment firm, Raymond James, found that while Lyft has fewer riders, the app does have more loyal customers.
‘While Lyft trails Uber in share, it does have a highly engaged user base - we found that Lyft users actually use the service more frequently than Uber users,’ the report said. That means that the smaller company could lure more investors that are willing to go long.
Despite the tarnished reputation, Uber’s IPO debut should be one of the most profitable of 2019. The survey found that about half of respondents have never used a car sharing app, so both ridehailing companies have room for customer growth.
'Ride-hailing companies should be capable of sustaining teens to 20% growth rates for long periods of time (similar to Google and Amazon)', said the survey.
.jpg)
