Uber targets $90bn valuation as it prepares for stock market debut

Price tag is lower than the $120bn that had been suggested last year, but questions remain about ride-hailing service’s chances of turning a profit

Ben Chapman@b_c_chapman
Friday 26 April 2019 15:59
Uber protesters leave burning car blocking entrance to tourism fair in Madrid

Uber is seeking a valuation of up to $91.5bn (£70.8m) when it sells shares publicly for the first time next month.

Updated stock market filings revealed the ride-hailing app is targeting a share price of $44 to $50, meaning it will raise around $9bn in cash to fund further expansion.

Uber’s price tag is lower than the $120bn that had been suggested by investment bankers last year but still represents a large sum for a company that has never come close to turning a profit and recently warned it may never make money.

The $90bn-plus valuation reflects confidence among investors that Uber will eventually be able to turn some of its huge revenues into profits.

However, the fact that the price is lower than previously forecast reflects poor performance by other high-profile technology startups that have recently gone public, notably Uber’s closest rival Lyft, which has fallen 20 per cent in a month.

Uber is pricing itself at eight times its revenue, somewhat lower than the 11-times multiple that Lyft aimed for.

As part of the initial public offering (IPO) Uber will sell $500m worth of shares to PayPal while early investors will be able to cash out around $1.3bn from the sale of parts of their respective stakes.

Uber co-founders Travis Kalanick and Garrett Camp will collect $323m between them if the company sells at the top end of its predicted range.

Mr Kalanick, who was ousted from the company after being accused of ignoring allegations of sexual assault by staff members, will see his remaining stake valued at more than $5bn.

Alongside details of the IPO, Uber also revealed that its drivers made 1.5 billion passenger journeys during the first three months of 2019, but the company reported a net loss of about $1bn.

Uber warned earlier this month that it “may not achieve profitability” as it revealed it lost $3bn last year and $8bn over its 10-year existence. Uber said it expects operating expenses to “increase significantly in the foreseeable future” as it continues its expansion.

In a filing with US regulators that revealed its financial health for the first time, Uber also said that its rapid growth has recently slowed.

The company had 91 million average monthly users across its platforms, including food-delivery app Uber Eats at the end of 2018 but growth slowed to 33.8 per cent from 51 per cent a year earlier.

Those users generated sales of $11.3bn last year, 42 per cent higher than in 2017.

Chief executive Dara Khosrowshahi said: “Over the past 18 months, we have improved our governance and board oversight; built a stronger and more cohesive management team; and made the changes necessary to ensure our company culture rewards teamwork and encourages employees to commit for the long term.”

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