Uber’s filing for an initial public offering on the New York Stock Exchange has the rideshare company preparing to enter the stock exchange under the UBER ticker.
Lyft Inc. (LYFT, Financial) went public on March 29, and while a smaller company than Uber, does provide insight into how its rival’s IPO may go for investors.
Lyft’s IPO was like many others, with an initially high value that dropped over the first two weeks of trading.
The company’s stock closed its first day of trading at $78.29 a share and stood at $58.46 a share in morning trading on April 12. Lyft’s stock fell more than 20% over the past week and is down from the IPO price of $72 a share.
Uber and Lyft are two very different companies in terms of size and revenue, but, according to the company’s public filing, Uber suffered higher losses. Uber generated $11.27 billion in revenue in 2018 versus Lyft’s $2.2 billion. Uber also posted a net earnings before interest, taxes, depreciation and amortization loss of $1.85 billion, while Lyft’s net loss was $911 million.
Uber’s offering is expected to be much higher than Lyft’s as valuation estimates range between $90 billion and $120 billion.
Like Lyft, initial purchases on the day the company goes public will likely fuel gains over the IPO price before cooling off.Â
Uber’s stock may face the same trajectory, especially with the company remaining unprofitable. The company has a lot of headwinds, so while it is investing overseas and employees are even using a visa program to work, profits remain a concern.
Growth is slowing for Uber, and the company’s IPO filing claims operating expenses are expected to “increase significantly for the foreseeable future.” The company also cautioned it may never be able to achieve profitability.
The company’s rapid growth over the past three years has also slowed as competition increased, investigations into a data breach and even the purchase of Grab continue. Uber’s future on the stock exchange will put pressure on the company to turn a profit, and this may prove to be too difficult.
Disclosure: The author does not have any stakes in the listed equities.
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