Uber goes public: everything you need to know about the biggest tech IPO in years Share All sharing options for: Uber goes public: everything you need to know about the biggest tech IPO in years After almost a decade of disruption, Uber is finally going public. The company is the highest valued tech IPO since Facebook and Alibaba, and it’s part of a wave of Silicon Valley “unicorns” to go public this year, including Airbnb, Zoom, and Slack. While today’s debut represents a new chapter for the money-losing, scandal-prone Uber, it also likely signals the end of an era of cheap rides for millions of drivers and riders across the globe. Here’s everything you need to know about Uber’s big day. What’s the deal with Uber’s valuation? It’s up, it’s down... Late last year, the expectation was that Uber would go public at a whopping $120 billion, nearly double the company’s valuation in a fundraising round from August 2018. That would have made Uber more valuable than General Motors, Ford, and Fiat Chrysler — Detroit’s “Big Three” automakers — combined. But as the public offering neared, that valuation began to slip. Earlier this week, Uber said it expected to price its initial public offering between $44 and $50 per share, finally settling on the low end of $45. At that price, the company will be valued at about $75.46 billion, which still makes it one of the most valuable companies ever to go public, but that’s a 38 percent drop in its estimated valuation from October 2018. What happened? A bunch of things, most notably the experience of main rival Lyft since it went public in late March. Since then, its stock has fallen more than 25 percent. Lyft also reported losing a staggering $1.1 billion in its first quarter earnings, which the company chalked up to 2019 being a “peak loss” year. Expect the same from Uber. The ride-hail company already loses somewhere around $800 million a quarter, and it is significantly larger than Lyft, with a global reach and numerous side businesses like food delivery and freight. When asked by CNBC if 2019 will also be a year of peak losses for Uber, CEO Dara Khosrowshahi said that was the “intent.” Uber already loses obscene amounts of money; it will interesting to see how the markets react to accelerated cash loses later this year. Wait, what’s the deal with Travis Kalanick? Okay, very quickly because this is kind of petty: Uber’s co-founder and former CEO Travis Kalanick was not invited by Khosrowshahi to help ring the bell at the New York Stock Exchange this morning, which some see as a major snub. If you’ll remember, Kalanick was the face of the company during Uber’s annus horribilis in 2017 when self-inflicted scandals began piling up like for-hire vehicles on the 101 freeway. He was ousted in mid-2017 and replaced by Khosrowshahi, but he remains a major player in the company as a board member and a minority shareholder. Kalanick wanted to help ring the bell today, but Khosrowshahi reportedly said no. It seemed like a move designed to emphasize Uber’s future rather than its past. But, of course, all anyone could think was “drama!” Asked about Kalanick’s absence on the dais, Khosrowshahi told CNBC that those spaces were reserved for “longtime employees who have been with us thick and thin, and drivers and couriers who use our service. That’s what the dais should honor.” That said, he also praised Kalanick for his “genius” and noted that the ex-CEO was still there to celebrate and rub elbows with executives and investors. Okay, so Uber’s public now. What does that mean for me? Most of the sums we’re talking about are huge, abstract, and don’t mean much to the average person. Assuming you aren’t Jeff Bezos (unless you are; hi, Jeff!) or Kalanick, Uber going public isn’t going to result in some influx of billions of dollars into your bank account. To answer that question, though, it depends on what type of person you are. Are you a person who uses Uber frequently or semi-frequently? If so, Uber’s IPO will likely mean more expensive rides in the near future. Uber’s IPO is likely to mean more expensive rides in the near future But, you may ask, isn’t Uber in a price war with Lyft? And shouldn’t that mean cheaper, not more expensive, fares? Perhaps in some markets, Uber will slash prices to poach riders from Lyft, but that’s not likely to last very long. Both companies are now public and will face pressure from big investors and shareholders every quarter to stem their losses. As previously mentioned, both Uber and Lyft are huge money losers. In 2018, Uber reported an operating loss of $3 billion on revenue of $11.3 billion, and its accumulated deficit reached nearly $8 billion at the end of last year. Both Uber and Lyft have been subsidized over the past decade by venture capitalists and other private investors who have been willing to bet on the ride-hailing upstarts and whose funding allowed the experiments to grow with low fares. The companies used this cash influx to decimate the incumbent taxi industry and grab huge amounts of market share. But as public companies, that stage of their lives ends now. There are other enormous pressures. Hundreds of Uber drivers went on strike this week ahead of the IPO in an effort to highlight poor pay and unsatisfactory working conditions. They argue that Uber’s business model enriches the company’s executives at the expense of low-paid drivers who are classified as independent contractors, making them ineligible for the benefits of full-time employment. Just ahead of its IPO, Uber said in a regulatory filing it had reached settlements with the majority of the 60,000 drivers who filed arbitration complaints over their employment status. The settlements should cost between $146 million and $170 million. Uber doles out cash incentives to drivers to keep them on its platform, hurting its bottom line even further, as well as rider discounts.<doc-sep>The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here. At long last, it’s lift-off for Uber. After pricing its initial public offering at $45 per share — at the bottom end of the range it set previously — to raise $8.1 billion, the transportation company began trading today on the New York Stock Exchange, and the shares opened at $42. 2. Jeff Bezos aims Blue Origin at the Moon Bezos took the stage in front of select members of the media, executives, government officials and a gaggle of middle schoolers to reveal new details of his plan to get to the Moon by 2024. 3. Flaws in a popular GPS tracker leak real-time locations and can remotely activate its microphone The Chinese-manufactured white-label location tracker, rebranded and sold by more than a dozen companies — including Pebbell by HoIP Telecom, OwnFone Footprint and SureSafeGo — contains security flaws, which security researchers say are so severe the device should be recalled. 4. Apple CEO Tim Cook talks WWDC student program, coding initiatives and SAP We talk to the Apple CEO about coding literacy, the SAP partnership and some other interesting topics. (Extra Crunch membership required.) 5. Justice Department charges Chinese hacker for 2015 Anthem breach U.S. prosecutors have brought charges against a Chinese national for his alleged involvement in the data breach at health insurance giant Anthem announced in 2015 that resulted in the theft of 78.8 million records. 6. Smartphone shipments hit a five-year low in North America That’s bad, but also in line with what we’ve been seeing globally. 7. Facebook AR/VR product head Hugo Barra is being replaced After initially being hired to lead the whole VR division, Barra will now be leading global AR/VR partnerships, while Erick Tseng, Facebook’s director of product management, will be replacing Barra in his most recent role leading AR/VR product management.<doc-sep>Ouch. Yikes. Oof. Sigh. Those are some of the friendlier phrases I imagine came out of the mouths of bankers, investors, executives and really anyone who has been paying close attention to Uber’s road to the stock markets today when the company debuted on the New York Stock Exchange below its initial public offering price. The ride-hailing business (NYSE: UBER), previously valued at $72 billion by venture capitalists, priced its stock at $45 apiece for a valuation of $82.4 billion on Thursday. It began trading this morning at $42 apiece, only to close even lower at $41.57, or down 7.6% from its IPO price. Still, the IPO was successful enough for Uber. The business now has $8.1 billion on its balance sheet to invest in growth and, ideally, transform into a profitable business. Anyone who expected Uber to climb past $100 billion at its IPO is surely disappointed. And those who projected a valuation of some $120 billion, well, they’re probably feeling pretty dumb. Nonetheless, Uber’s new market cap makes its exit one of the most valuable in history, and represents a landmark event for tech, mobility and the gig economy at large. Where the stock will go from here, who knows. Lyft, as we’ve observed, has taken quite a hit since it completed an IPO in March. The Uber competitor is currently trading at a higher price than Uber: $51 per share with a market cap of about $14.6 billion. Its stock has fallen all week long, however, after the company posted losses of more than $1 billion in the first quarter of 2019.<doc-sep>SAN FRANCISCO, CA - JANUARY 31: A Lyft driver places the Amp on his dashboard on January 31, 2017 in San Francisco, California. (Photo by Kelly Sullivan/Getty Images for Lyft) An Uber banner is displayed on the facade of the New York Stock Exchange on Friday, May 10. Screens display the Uber Technologies Inc. logo on the floor of the New York Stock Exchange (NYSE) during the company's IPO in New York, U.S., May 10, 2019. REUTERS/Andrew Kelly (CNN Business) — For nearly two years, Uber raced to rebuild its executive bench, overhaul its internal culture and repair its tarnished brand after suffering a long list of PR crises, all with the stated intention of being ready to go public in 2019. But that wasn’t enough to guarantee investor enthusiasm on Wall Street. Shares of Uber fell more than 7% on its first day of trading Friday, marking a rocky Wall Street debut for a company that endured plenty of bumps on its long road to going public. Uber opened at $42 a share, below its IPO price of $45, and ended the day even lower at $41.57. That disappointing first day performance sets Uber apart from the vast majority of its tech peers. In the past five years, only 10% of venture capital-backed US technology IPOs finished the first day in the red, according to data provided to CNN Business from Renaissance Capital, which manages IPO-focused exchange-traded funds. Uber did succeed in raising $8.1 billion in one of the largest public offerings ever, a substantial war chest that should fund the company’s expansion into new cities and service categories. But that amount was still at the low end of what Uber originally set out to raise. The company’s public debut comes at the end of a turbulent week filled with headlines about striking workers, steep losses in the ride-hailing industry and broader market jitters over an escalating trade war between the United States and China. The less-than-stellar offering could prove to be just the first rude awakening Uber faces as it transitions to the public market. Over the last decade, Uber emerged as the poster child for a generation of technology startups that raised — and lost — unprecedented amounts of money while avoiding going public as long as possible. But that may not fly on Wall Street. Lyft (LYFT), Uber’s chief rival in the United States, has languished on the stock market since going public in late March. Shares in Lyft (LYFT) fell below their IPO price on their second day of trading and have continued to tumble since. The stock is now down about 25% from the IPO price. Richard Drew/AP Uber logos top trading posts on the floor of the New York Stock Exchange on Friday. Like Lyft, Uber has a history of bleeding money as it subsidizes the cost of rides and invests in an increasing array of transportation options. Uber lost $1.8 billion in 2018, more than any US startup has ever lost in the year prior to going public. The previous company to hold that dubious honor, however briefly: Lyft. “It’s amazing what [Uber has] built, but they are still not done doing it. They’ve been subsidizing the business,” said Kathleen Smith, principal at Renaissance Capital. “The boat doesn’t float on its own bottom.” As Smith points out, tech companies that have come to market in recent years with massive losses — including Lyft and Snap — are currently “not trading above their IPO price.” Uber, for its part, has pitched itself as an “Amazon for transportation” in that it offers a broad range of services, including meal deliveries and freight shipping. But the Amazon comparison can also be read as a clear signal to investors. Amazon lost money for years while investing to build a massive business. Now, it makes billions in profit each quarter. Uber’s long and bumpy road Uber launched in 2009 with the goal of offering private cars on-demand, simply by opening an app on your smartphone. In the decade since, it bulldozed ahead of ride-hailing rivals through a mix of aggressive fundraising, dirty tricks and a take-no-prisoners attitude toward expansion in the United States and abroad. Along the way, Uber destabilized the taxi industry, became the most valuable US startup and emerged as the darling of Silicon Valley, spawning an entire category of companies billing themselves as the “Uber for X.” But that changed in 2017 when former engineer Susan Fowler rocked the company by making public allegations of sexism and harassment in a lengthy blog post. An internal investigation revealed a reckless office culture where “toe-stepping” was a prized value and executives had unchecked power. Travis Kalanick, Uber’s cofounder and then CEO, admitted he needed to “grow up” after being caught on camera arguing with an Uber driver. Kalanick was ultimately ousted in June 2017. At that point, Uber was operating without a CEO, CFO, COO or CMO. Uber replaced the brash Kalanick with Dara Khosrowshahi, a seasoned executive who ran Expedia (EXPE) previously. Khosrowshahi quickly stressed that Uber had to change. “What got us here is not what’s going to get us to the next level,” he said. Since then, he has revamped the company’s cultural norms, which now include maxims such as “We Do The Right Thing,” in stark contrast to Kalanick’s edict to “Always Be Hustlin’.” He’s made key executive hires, including a CFO after three years without one. And he’s put to rest some outstanding crises, including a major lawsuit with Google’s self-driving car unit Waymo over the alleged stealing of trade secrets. Under Khosrowshahi, Uber also reconsidered its efforts to operate all across the world. “One of the potential dangers of our global strategy is that we take on too many battles across too many fronts and with too many competitors,” he said last year. A bad week to go public After that mad dash to overhaul its business and go public, Uber ran into a different problem: the Week from Hell. On Sunday, President Trump surprised investors by threatening to impose higher tariffs on China in a tweet.<doc-sep>
At long last, it’s lift-off for Uber. After pricing its initial public offering at $45 per share, at the bottom end of the range it set previously, to raise $8.1 billion, the transportation startup began trading today on the New York Stock Exchange, and the shares opened at $42, down from the IPO price. Ahead of Uber finally making its debut, the company had an indication price that went as low as $42 ahead of live trading. With the overall market in a slump this week over trade woes with China, it’s a challenging time to list, to say the least. Uber had raised $28.5 billion as a private company from no less than 166 different backers, with its last valuation in the region of $75 billion. The $82.4 billion valuation that it finally settled on for the IPO (selling 180 million shares at $45/share) is definitely up from that, but far from the lofty projections of $120 billion that banks and analysts that floated in the months leading up to today. The figures nevertheless cement Uber, alongside Alibaba and Facebook, as one of the most valuable tech IPOs in history, and a major beacon for breaking ground in a new area of tech, transportation. But if it is the sheer scale and potential of Uber that catapulted it to such financial heights (real and imaginary), it’s the bare financials that have tempered some of those notions. On one side, Uber essentially created and currently dominates the market for on-demand transportation, which started with the premise of connecting drivers with passengers by way of an app that tracked the location of both, but eventually evolved into a wider two-sided marketplace ambition that brings together different modes of transportation — including bikes, public buses and more — with human passengers, as well as the movement of other goods like food, all on a global scale. That model has propelled Uber to 93 million active platform consumers (from 70 million a year ago) and 17 million trips per day across 700 cities on six continents, along with a lot of high hopes from others like PayPal — which are making very late-stage, strategic investments to bank on what it believes could shape up to be a lucrative e-commerce empire in the years to come. But Uber’s prospects are not without competition — which includes a host of more regional players like Lyft, Gett, Heetch, MyTaxi, Bolt and more — and not without controversy. Even as it goes public, the company is dealing with high-profile driver protests, lawsuits and ongoing regulatory pressures, not to mention a bigger cloud over its business practices that has hovered for years that the company has worked to dispel. Even today, during the iconic bell ringing, there was a notable absence: former CEO and co-founder Travis Kalanick, who was ousted over the controversies around business practices but still sits on the board, was not up there — although he did show up at the NYSE for the event. $UBER The Uber drama Continues: Travis Kalanick — who built @Uber in his image and still sits on the board with an 8.6% stake in the company after being ousted almost two years ago — was not on the balcony to ring the Opening… https://t.co/aUKNKSkFd2 pic.twitter.com/R1h6kOli3d — Silentmax (@silentmax) May 10, 2019 Outside, meanwhile, protesters against the company were also making their voices heard. On the pure metric of profit and loss, Uber’s been firmly in the latter column, most recently posting a loss of some $1 billion in the last quarter on revenues of $3 billion-$3.1 billion, versus $2.6 billion a year ago. Today’s listing is a small pause on the bigger question of how and if Uber will ever turn that boat around. It has made some significant shifts, such as divesting certain regional assets and reducing some of the incentive payments and discounts it made to drivers around the world to lure them to its platform; and under current CEO Dara Khosrowshahi, it has made a concerted effort to play nice on a number of fronts. Khosrowshahi acknowledged the new set of challenges that staff would be facing as of today in a memo he sent out this morning: As we move from a private to a public company, our jobs will no doubt become harder and all eyes will be on us. We’ll have an even deeper responsibility to our customers, to our shareholders, to our cities, and to each other.