Uber IPO: Is Uber really worth $120bn? – The Wall Street Journal

DUBLIN – I'm on record as not really believing in Uber. But what do I know? Investment banks are reportedly lining up to value the ride-hailing company at $120 billion – more than General Motors, Ford, and Fiat Chrysler combined. Now, the figures that investment banks give in their IPO proposals are notoriously optimistic (they are, after all, making a bid for the lucrative business of handling said IPO). Nevertheless, that's a stellar valuation, much higher than the valuation it achieved in its last capital raising this year ($76bn). The IPO is being planned for the second half of next year, and a lot could happen between then and now. Nevertheless, there has been some rotation out of tech/growth stocks, especially those that have a more tenuous history of profitability. Uber is not profitable and doesn't expect to be profitable until 2021 or so. The company is also burning a lot of cash discounting fares and investing in technologies like self-driving cars. In addition, it faces stiff competition from around the world, and has been pushed out of a number of markets, including China, by strong domestic competitors. Definitely one to watch. – Felicity Duncan.Uber Proposals Value Company at $120 Billion in a Possible IPO.By Liz Hoffman, Greg Bensinger and Maureen Farrell.(The Wall Street Journal) Uber Technologies Inc. recently received proposals from Wall Street banks valuing the ride-hailing company at as much as $120 billion in an initial public offering that could take place early next year, according to people familiar with the matter..___STEADY_PAYWALL___.That eye-popping figure is nearly double Uber's valuation in a fundraising round just two months ago and more than General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV are worth combined..Goldman Sachs Group Inc. and Morgan Stanleylast month delivered the valuation proposals to Uber, the people said. These documents, which typically advise on how to position shares to potential investors, are a common step before banks are formally hired to underwrite IPOs..The bank presentations show Uber gathering momentum toward an IPO that is among the most hotly anticipated on Wall Street and Silicon Valley and could come sooner than expected as the new-issue market sizzles. Founded in 2009 and sustained by an ample supply of private capital, Uber is seen as a bellwether for a crop of highly valued start-ups that have delayed tapping the public markets. Its expected debut comes as rival Lyft gears up for an IPO on a similar time frame..Over the past year, Uber has labored through a series of scandals, from claims of workplace sexual harassment to the alleged theft of trade secrets from rival Alphabet Inc., and the ouster of co-founder Travis Kalanick. Its new chief executive, Dara Khosrowshahi, has sought to win back investors, drivers and riders who can now choose from a growing group of taxi smartphone apps..Mr Khosrowshahi has said the company is aiming for an IPO in the second half of 2019; at what valuation has been unclear. Uber last raised money, from Toyota Motor Co. in August, at a $76 billion valuation..There is no guarantee Uber will go public within the expected time frame or at the valuation envisioned by investment bankers hungry for fees. The IPO market runs notoriously hot and cold, and though 2018 has been a strong year for technology and other issues, conditions could be less favorable when Uber is ready to list its shares. Indeed, one source said the banks are pitching the earlier listing in large part because of fears the IPO market will cool..And any IPO process could also be complicated by factions among Uber backers, who received their shares over seven years at valuations ranging from as low as $50 million..In documents distributed in recent days related to a potential bond offering—led by Morgan Stanley—Uber indicated it won't be profitable for at least three years, according to people familiar with the matter. It expects to generate between $10 billion and $11 billion in revenue this year, according to the documents, compared with $7.78 billion last year..As part of an agreement with investor SoftBank Group Corp. 9984 3.62% , Uber must go public by the end of next year, according to people familiar with the matter. If it fails to do so, Uber would have to allow certain investors—those who have put in at least $100 million or held shares for at least five years—to sell their stakes on the secondary market, these people said. That could damage Uber's ability to control the price at which an IPO is ultimately set..Lyft Inc., Uber's most formidable U.S. rival, tapped JPMorgan Chase & Co., along withCredit Suisse Group AG and Jefferies Group LLC, to lead an IPO that may come earlier in 2019, The Wall Street Journal also reported Tuesday. The upstart's valuation is expected to top the $15.1 billion it sold shares at privately this year..And newer rivals, including Via Transportation Inc. and Gett Inc., have raised cash from investors including Daimler AG and Volkswagen and are using offers of steep discounts to lure new riders..Morgan Stanley's proposal valued Uber at up to about $120 billion, while Goldman set a slightly lower ceiling, according to one of the people. The valuations hinge in part on highlighting the potential of Uber's businesses outside its ride-hailing app, some of the people said, and also take into account its stakes in other transportation start-ups including China's Didi Chuxing Technology Co. and Singapore's Grab..The bankers have valued the company's food-delivery service, UberEats, at as much as $20 billion, according to one person. That is twice what Grubhub Inc., the leading U.S. food-delivery service, trades at today on the public markets..UberEats operates in nearly 500 cities globally and is expected to reach $6 billion in orders this year, from which the company takes a commission. While still a money-loser, it is expected to become profitable much sooner than Uber's ride-hailing business and so could help subsidize losses..Calving off Uber's self-driving car unit could free it to license its technology to a wider array of car makers and transportation companies. Such a move could also insulate Uber from negative headlines like after one of its vehicles struck and killed a pedestrian in Arizona earlier this year..It announced a $500 million investment from Toyota and an agreement to jointly develop self-driving vehicles. The deal will allow Uber to pass some of its development costs along to Toyota after pouring some $750 million into robot cars last year, according to people familiar with the matter..General Motors and Ford have both moved to spin off their self-driving car operations over the past year. GM's business, called Cruise, attracted a $2.25 billion investment from SoftBank..Write to Liz Hoffman at liz.hoffman@wsj.com, Greg Bensinger at greg.bensinger@wsj.comand Maureen Farrell at maureen.farrell@wsj.com.Corrections & AmplificationsUber holds a stake in Singapore's Grab. An earlier version of this article incorrectly stated the name of the start-up as India's GrabTaxi Holdings Pte. (Oct. 16)

Uber IPO: Is Uber really worth $120bn? – The Wall Street Journal

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