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Uber Said to Plan I.P.O. Price Range Valuing Company as High as $90 Billion Uber Said to Plan I.P.O. Price Range Valuing Company as High as $90 Billion
(about 1 hour later)
SAN FRANCISCO — Uber plans to set a price range for its initial public offering that would value it at as much as $90 billion, said a person with knowledge of the situation, in a sign of caution amid a flood of highly hyped tech offerings. SAN FRANCISCO — Uber plans to set a price range for its initial public offering that would value it at as much as $90 billion, a person with knowledge of the situation said on Thursday, in a sign of caution amid a flood of highly hyped tech offerings.
The world’s largest ride-hailing company plans an initial pricing of $44 to $50 a share, said the person, who was not authorized to speak publicly, putting its total valuation between $80 billion and $90 billion. Uber would fall short of the $100 billion valuation that it recently told some investors it might reach upon going public. It would still be above the $76 billion it was appraised at in its most recent private fund-raising in August. The world’s largest ride-hailing company, Uber plans to offer its shares to investors for $44 to $50 each, said this person, who was not authorized to speak publicly, putting its total valuation between $80 billion and $90 billion. In that range, Uber would fall short of the $100 billion valuation that it recently told some investors it might reach upon going public, though it would still be above the $76 billion it was appraised at in its most recent private fund-raising in August.
Uber’s planned price range, which is not finalized and may change before it starts trading next month, follows the offering of the rival ride-hailing firm Lyft last month. Lyft’s shares spiked upon the company’s first day of trading but have since skidded below its offering price, raising questions about the appetite of investors for these firms. Lyft, Uber’s chief rival in the ride-hailing industry, got off to a turbulent start in public markets. In the weeks since Lyft’s shares began trading, they have skidded below their offering price, making it more of a challenge for Uber to pitch itself to investors.
Since then, other companies that are going public have been conservative about their pricing. Pinterest, the digital pin board company that went public this month, initially priced its offering at below its last valuation in the private market. Lyft was the first ride-hailing business to go public, and stock investors are closely watching its progress to determine how to value the business model. Both companies are growing rapidly, but neither is profitable. Lyft increased its I.P.O. price after meetings with investors suggested there was a strong appetite for the stock, but since the stock began trading Lyft’s valuation has dropped from $24 billion to $16.1 billion.
The rocky start created pressure for Uber to be conservative in its pricing, and avoid “breaking” — or falling below — its I.P.O. price, said Kathleen Smith, a principal at Renaissance Capital, which provides institutional research and I.P.O. exchange-traded funds.
“Lyft acts as a very important valuation benchmark for Uber,” she said. “Uber cannot break its I.P.O. price. The best way to avoid breaking your I.P.O. price is to be conservative when you start out with your valuation.”
Uber’s potential valuation, which it will complete the day before it begins trading on the stock market next month, nonetheless officially crowns the company as the biggest of its generation of tech start-ups. Many of these firms upended traditional industries like transportation and real estate through mobile apps and a marketplace-based business model that relies on independent contractors. Over the past decade, Uber, which lets people hail rides through an app and uses freelance drivers, has disrupted the taxi industry and thoroughly changed many people’s travel behavior.
In a recent regulatory filing, Uber said it lost $1.8 billion in 2018 on revenue of $11.3 billion. It also noted that, although the company’s business is still expanding, that growth had slowed. Unlike Lyft, Uber has also begun secondary businesses providing freight shipment and food delivery, which the company said were growing more quickly than its core ride-hailing business.
Uber plans to begin meeting investors in an official roadshow next week, and its underwriters, led by Morgan Stanley and Goldman Sachs, could raise the offering price of its shares if they determine that prospective investors are interested enough. In a letter Uber issued to holders of its convertible bonds this month, the company floated a price range of $48 to $55 for its shares.
Since Lyft’s I.P.O., other companies have been rewarded for playing it safe as they first approached investors. Pinterest, the digital pin board company that went public this month, initially offered its shares to investors at below its last valuation in the private market. By the time of its debut, however, the price range had been raised above that previous valuation.
Uber’s planned price range was reported earlier by Bloomberg.Uber’s planned price range was reported earlier by Bloomberg.
Even at $90 billion, Uber would be the third-largest American I.P.O. in the last 10 years, said Kathleen Smith, a principal at Renaissance Capital, which provides institutional research and I.P.O. exchange-traded funds. Even at a $90 billion valuation, Uber would be the third-largest company to enter the United States’ public markets in the last 10 years, topped only by Facebook’s 2012 debut at $104 billion and Alibaba’s I.P.O. in 2014, which valued the e-commerce giant at $167 billion.
Lyft’s rocky start created pressure for Uber to be conservative in its pricing, Ms. Smith said. “Lyft acts as a very important valuation benchmark for Uber,” she said. “Uber cannot break its I.P.O. price. The best way to avoid breaking your I.P.O. price is to be conservative when you start out with your valuation.”