Uber is preparing for an IPO that could happen in early 2019 and the proposals it received from Wall Street banks have valued it as much as $120 billion, said a report by The Wall Street Journal. Proposals were submitted by Morgan Stanley (MS) and Goldman Sachs (GS) and the $120-billion valuation was put forth by Morgan Stanley while Goldman opted for a slightly lower figure.
This figure is almost double the $76 billion valuation that was given to Uber at a fundraising in August, which was led by Toyota Motor Co. Uber is said to have an agreement with SoftBank Group Corp. under which it has to conduct its IPO by the end of 2019. Otherwise, the shareholders who have invested $100 million or who have held shares for five years will have permission to sell their stakes. This would shake Uber’s control over its ultimate IPO price.
The report mentioned that Uber’s revenue for this year is expected to come in a range of $10 billion to $11 billion but the company is not expected to rake in profits for at least another three years. The IPO proposals value Uber’s food delivery service UberEats at up to $20 billion, twice that of GrubHub. While UberEats is still operating on losses, it is expected to pick up soon.
It cannot be said with certainty that the IPO will take place at the anticipated timeframe or valuation as the IPO market is prone to severe fluctuations.
Uber’s competitor Lyft is also said to be planning an IPO for early next year and according to a report by CNBC, the ride-sharing service has selected JPMorgan Chase (JPM) to lead the same. The company had also considered Credit Suisse Group AG (CS) and Jefferies Group LLC for the IPO. Lyft’s valuation is expected to top $15.1 billion, an amount that was set after the firm raised $600 million earlier in 2018.
Uber has battled several controversies from allegations of toxic work culture to theft of trade secrets from Waymo, which have in turn benefited Lyft.