Uber IPO: 5 of things, what you need to know about the potentially largest IPO in recent years

Uber quoth, what follows IPO will be posted 1 676 959 021 stock, excluding items, including options, limited promotions and warrants. At the top of the expected IPO price range, the company can be valued in 83,85 billion dollars. Uber plans to list on the New York Stock Exchange NYSE under the ticker “UBER».

Uber Technologies Inc. approached its initial initial public offering on Friday, giving investors a first look at, how big a company's offer can be.

Largest call-to-driver service in the United States updates its IPO prospectus, including the expected price range from 44 to 50 dollars per share, which means, what the company can attract up to 9 billion dollars at the high end of this range. This assessment suggests , what's Uber's prices UBER, IPO, probably , will be in the stadiums of other major offers , which have taken place in the US market in recent years.

Facebook Inc. FB attracted $ 16 billion thanks to its offer 2012 of the year, while Visa Inc.. V attracted almost 18 billion dollars in 2008 year, and Alibaba Group Holding Ltd.BABA earned approximately 25 billion dollars in 2014 year.

The company recently announced the emergence of new major investors. PayPal Holdings Inc. PYPL, agreed to invest 500 million dollars in Uber at the IPO price, while Softbank Vision Fund affiliates 4726 Toyota Motor Corp. TM, и Denso Corp. 6902 will jointly invest 1 billion. Usd. USA to newly formed self-driving company Uber.

Since the IPO is considered one of the largest in history, financial and general performance of Uber business, undoubtedly, become the object of scrutiny on Wall Street. And investors will be busy, trying to understand the business perspective of the company: Uber's prospectus includes 290 more than pages of comments and information even before, how the financial application will start.

Here are five important things, What you need to know about Uber and its plans to go public:

Sprawling business

Uber was launched as the equivalent of a taxi on demand, but since then the company's business has taken various forms. In addition to offering driving services with cars, the company has its own proposals "New mobility", which include bike and scooter options. Uber also runs a food delivery business., Uber Eats, which competes with Grubhub Inc.GRUB,-2.91% и Square Inc. SQ,+0.07% caviar.

The company stated, trying to apply its on-demand model to the shipping industry through a program called Uber Freight, which “connects carriers with the most suitable supplies, available on our platform, and gives operators an advance, transparent prices and the ability to order cargo at the click of a button. »

Mobility continues to be a topic, as Uber is looking for new apps for its more traditional business – horse racing. A year ago, the company launched Uber Health, which helps healthcare facilities arrange travel for patients. The company is also trying to make its "ride outside the window" service more suitable for corporations., using tools, which allow companies to book trips for employees, even if these workers don't have an Uber app.

Having so many different business areas, Uber will report its financial results in part, including unusual metrics. For example, while Uber will give its total income, he will also provide a number for “net income, adjusted using the base platform ". The main platform of the company "consists mainly of sharing and Uber Eats", stated in the company's prospectus, and this adjusted income metric removes such things, as additional incentives for drivers and recommendations.

Revenue increased to 11,3 billion dollars in 2018 year since 7,9 billion dollars a year earlier, increasing by 43%. But Uber's revenue more than doubled in 2017 year, therefore, the company's growth rate slows down significantly. The trends are similar for the main platform.

Uber take rate, representing part of orders, held by the company, will be calculated using the adjusted indicators of the underlying platform. Uber said, that the utilization rate of the underlying platform, which last year was 20%, can be calculated, considering the adjusted net income of the underlying platform as part of the gross reservations. Gross bookings reflect the cost of sharing rides, trips "New mobility", Uber Eats shipping and freight in dollars excluding discounts and refunds.

Uber to categorize some of its new ventures as "Other Bets". In the case of Uber, this means, that such areas, как Uber Freight и New Mobility (bicycles and scooters), will be highlighted in a separate area, to give investors a better understanding of how, how is the company's more proven business doing. While revenue at other rates rose to 373 mln USD. IN 2018 year since 67 mln USD., Mainly due to the growth of Uber Freight, the company said, what expects an increase in total losses in the near future, as she invests in other rates and autonomous driving.

Certainly, these are not the only things, who are to blame for the red ink on Uber's balance sheet. The company's net profit last year was 1 billion dollars thanks to the sale of some operations in Russia and Asia, but the operating loss was 3 billion dollars. Uber recognized, that sometimes due to drivers' incentives, drivers take home more, what Uber actually brings from the client at a given rate.

Non-financial metrics are also important to understanding Uber's business..

The company will disclose the monthly active users of the platform or the number of consumers, who use Uber for a ride or meal this month. Uber had 91 million of such consumers in 2018 year compared to 68 millions a year earlier.

Uber customers have committed 5,2 billion "trips" during the last year, although Uber has some nuances regarding, How does he count trips?. UberPool bus depot, in which three clients share a trip, but pay separately, will qualify as three trips for the purposes of this indicator. Uber Eats deliveries also count towards trips. These warnings are one of the reasons, for which Uber metrics will not be directly compared to metrics, offered by Lyft Inc.LYFT,-2.05% who does not have a food delivery business.

Although not critical in terms of investment, tip data has also been included in the prospectus. Uber said, what the drivers have earned 1,2 billion dollars by the end of last year. The company introduced a tip in the middle 2017 of the year.

Uber works in 63 countries and informed, what only 2% of those, who lives in these places, really used the services of the company.

Driver dynamics

Uber doesn't have a good relationship with its drivers., and the company expects, that the dynamics will deteriorate. "We expect, that the dissatisfaction of drivers in general will increase ", – said Uber, as the company's desire to improve the bottom line leads to a reduction in some of the incentives, provided to drivers. Uber will pay drivers to complete a specified number of rides within a specified period of time.

Uber also admitted the obvious in its prospectus: if he was forced to classify his drivers as actual employees, not contractors, this change would affect its financial results. Employees are entitled to legal protection in respect of wages and overtime. Companies should not offer these benefits to their contractors.

All in all, Uber is in a strange position with its drivers: he needs them now, but imagines a not so distant future, when the cars will drive themselves, to pick up passengers – most part of time.

Uber kindly states, that in an autonomous world the role of human drivers may still diminish: autonomous cars can be useful for driving in a "standard, a well-planned route in a predictable environment in good weather ", but people can remain a cog in an Uber car during more complex scenarios.

"In other situations, for example, heavy traffic, difficult routes or unusual weather conditions, we will continue to rely on drivers ", – said in the prospectus. "Moreover, high demand events, such as concerts or sporting events, probably, will exceed the capacity of a fully utilized fully autonomous vehicle fleet and require the dynamic addition of drivers to the network in real time ".

Uber may have a one-way competitor Lyft, when it came to picking an over-the-top mission for her prospect. "We ignite opportunities, setting the world in motion ", – Uber said. CEO Dara Khosrowshahi added, what a giant, specializing in travel, "Is a once in a generation company", which "did not even cope with our work by one percent".

"Possibility of ignition"

In contrast,, Lyft simply decided to "improve people's lives with the world's best transportation.".

While Uber certainly has great opportunities, the company will have to get rid of several reputation problems. Co-founder Travis Kalanick was forced to step down in 2017 year after that, like he, reportedly, immortalized a toxic culture in the company, and since then Uber has had to deal with espionage and sexual assault crises.. Uber plans to release a 'transparency report' this year, concerning sexual violence and other safety issues.

Additional Information:

The official statement Uber can make already 11 April, roadshow starts at the end of the month. Securities trading on the New York Stock Exchange may begin in May.

Uber hopes, that investors will estimate the value of the company at $ 90-100 billion, sources say Reuters. Uber officials declined to comment.

At the end of last year, Uber received about $3,3 billion in loss. However, banks advising Uber suggest, that during the IPO it can be estimated at $120 billion. In December 2018 G. Uber confidentially filed with the US Securities and Exchange Commission (SEC) documents for the IPO in 2019 G. The WSJ also reported on Uber's plans to give some of its drivers the opportunity to take part in its initial public offering..

In its IPO filing, Uber disclosed financial and operating numbers for 2018 G. Uber rides consistently double-digit growth in Q4 2018 G. Reached 1493 million.

Uber also successfully attracts new customers, according to the company, there were more than 90 million at the end 2018 G.

Not everything is so smooth with the financial side of the company. Revenue in 2018 G. amounted to $11,27 billion, What's on 42% higher than in 2017 G. Nevertheless, the company is still unprofitable at the operating level: based on the results of 2018 G. operating loss amounted to $3033 million.

The company also noted, what is the probability, that profit targets will not be met due to price dumping by competitors, as well as due to pressure from regulatory authorities around the world.

Despite not the most outstanding financial performance, Uber IPO could be the largest in recent years. The company intends to attract about $10 billion, reports Reuters.

IN 2017 G. Bloomberg citing sources reported, that Uber was rated by Morgan Stanley and Goldman Sachs at approximately $120 billion.