Uber hopes to rev up Wall Street in stock market debut



Uber CEO Dara Khosrowshahi at an event in San Francisco in 2018.

James Martin/CNET

When Dara Khosrowshahi took over as Uber’s CEO a year and a half ago, he said his goal was to take the company public by 2019. Now he’s delivering on that pledge.

In one of the most anticipated initial public offerings this year, the ride-hailing company is expected to debut on the stock market Friday morning with a preopen share price of $45. At that price, Uber would raise $8.1 billion and be valued at $82 billion, making this the largest US IPO in the past five years.

The numbers, though eye-popping, are significantly lower than earlier expectations of a valuation of as much as $120 billion. The preopen price is at the low end of the $44 to $50 range the company forecast in a filing with the US Securities and Exchange Commission last month.

A host of issues have contributed to the conservative pricing. Lyft, Uber’s ride-hailing competitor, has had a rough time since debuting on the stock market earlier this year. On Tuesday, Lyft reported worse-than-expected results in its first quarterly report as a public company, which didn’t help.

Uber’s pending debut has also whipped up protest in the ride-hailing world, drawing unwanted attention to practices in the business. Drivers held a worldwide strike on Wednesday to demand better pay and working conditions, an event that was widely covered.

“We view Uber’s conservative pricing as a smart and prudent strategy coming out of the box as it clearly learned from its ‘little brother’ Lyft, and the experience it has gone through over the past month,” analysts at Wedbush Securities, a financial services firm, said in a statement.

Uber and Lyft offer the same core service but highlight different aspects of their business. To date, Uber has showcased itself as a global company that offers more than ride-hailing, including food delivery and (in the future) flying cars. Lyft is much smaller and concentrates on transportation.

Founded in 2009, Uber started as Ubercab, a black car service that let passengers hire a town car with the push of a button on their smartphones. A few years later, the company shortened its name and in 2012 pushed into the ride-hailing service we all know today. Since then it’s gotten into all types of services, including self-driving cars, on-demand scooters and bicycles, carpooling and freight trucking.

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The company has also experienced heaps of turmoil over the years. Uber’s co-founder and former CEO Travis Kalanick was considered the quintessential tech bro whose “burn the village” approach — his words, not ours — helped turn the startup into the behemoth it is today. But, as at many companies, Uber’s culture reflected the personality of the person at the top. It was aggressive and win-at-all-costs.

In 2017, everything came crumbling down for Uber. Scandal after scandal cost the company customers, drivers and reputation.

The company lost more than 200,000 angry passengers to a #DeleteUber campaign. It was outed by former Uber engineer Susan Fowler, who wrote a bombshell blog detailing a chaotic corporate culture that OK’d sexual harassment. Lawsuits poured in, executives were fired, at least five separate criminal investigations were initiated. Along the way, Kalanick was forced to step aside.

Khosrowshahi took over the helm in September 2017, vowing to fix Uber’s moral compass. Hiring his own leadership team, instilling new cultural norms and working to clean up the company’s previous messes, many of his employees say, he’s drastically turned around the company culture. Khosrowshahi has also worked to fortify Uber’s business by sealing a $9.3 billion investment deal led by Japanese internet giant Softbank and pushing to settle Waymo’s high-stakes lawsuit over alleged stolen trade secrets on self-driving cars.

As Uber becomes a publicly traded company, however, it still has issues to iron out. Most importantly: the fact that it’s never been profitable and may never be. The company said in its S-1 filing that it garnered $11.3 billion in revenue in 2018 on $49.8 billion in bookings. Even so, it lost $1.8 billion in 2018.

“We expect our operating expenses to increase significantly in the foreseeable future,” Uber said in the filing. “And we may not achieve profitability.”

But that might not daunt investors, for the time being.


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