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Uber Aims $91.5 Billion Value In IPO, Reports Q1 Loss In Filing

Uber Aims $91.5 Billion Value In IPO, Reports Q1 Loss In Filing
US ride hailing company Uber is targeting to gain a market valuation of up to $91.5 billion from its initial public offering which would make it one of the largest IPOs issued by a company in the US in many years now. Analysts would also be looking closely at the success of the IPO which would clearly indicate the attitude of investors towards business that promise high growth but are also highly unprofitable currently.
A target price range of $44 to $50 per share for its IPO was set by Uber in a regulatory filing on Friday. The company is aiming to raise up to $9 billion by issuing 180 million shares in the offering in the IPO and an additional 27 million is also being planned to be sold by the existing investors of the company for a value which can be as high as $1.35 billion.
According to reports published earlier, about $10 billion could be the the combined value of Uber shares sold in the IPO.
In a private placement at the price the IPO eventually settles at, PayPal had agreed to purchase $500 million of stock, Uber also said.
The latest public filing by Uber was made just before the company is setting itself to start the investor road show where in the company would be pitched to public markets investors by the Uber management in the next few days. According to sources quoted in the media, it is expected that the pricing of the IPO would be set on May 9 and start trading on the New York Stock Exchange the day after.
It is likely that a range of questions would have to be faced by Uber which would most definitely be related opt the company’s expectations of making profits. Other possible questions could relate to the strategy of the company to navigate the transition to autonomous vehicles and how the higher driver costs from minimum wage rules would impact the business model of the company.
A net loss attributable to the company around $1 billion on sales of roughly $3 billion for the first quarter of the current year was reported in the filing by Uber which clearly reflects the capacity of the company to generate high revenues but its continued trend ot make losses.
“When it comes to Uber, we believe there are still questions over the current car-sharing model, the economics of which are not immediately or obviously attractive for sustainable, long-term investment,” Mark Hargraves, head of Framlington Global Equities, wrote in a note.
Last year, investment bankers had told Uber that it could fetch as much as $120 billion in the IPO. However the current valuation that Uber is seeking from the TPO is quite low compared to that amount while being closer to the valuation of $76 billion that the company achieved in its last private fundraising round in 2018.
The new CEO of Uber Dara Khosrowshahi would also have to convince the investors about the changed corporate culture in the company as well as changes made in the company’s business practices follow a string of scandal and controversies in the last two years.

Christopher J. Mitchell

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