Apparently, Uber will be selling 10 billion dollars worth of shares in the largest IPO (Initial Public Offering) of 2019, Reuters reports.
It looks like the giant company plans to learn from its main competitor’s mistakes and improve upon them. Uber wants to craft an IPO that will be more calculated, careful, rooted in reality, and thus – more successful. As you probably know by now, Lyft’s IPO was a huge mess and ultimately – a failure. Uber is taking a more intelligent approach to the issue.
Trying not to repeat Lyft’s mistakes
Even though at first Lyft was praised for taking the risk and being at the forefront of the market by launching the IPO before Uber, the mood quickly shifted, as the decision turned extremely sour.
The stock of the company went live on the financial markets $72 per share. However, they quickly dipped well below the launch price, effectively meaning that Lyft was overpriced. After 2 weeks, Lyft’s shares cost 7 per cent less than the IPO predicted. A lot of experts in the industry also changed their tune. Now the target movement are expected to be much more bearish, with some analysts even predicting a price of $42 per share – which is catastrophic when compared to the ambitions the company had with this project. The prices are expected to keep drifting to lower points for at least a few years.
“We can expect Lyft to be a significant short in the market for a long time, especially with analysts already posting ‘sell’ recommendations less than a week after its IPO,” says Ihor Dusaniwsky.
Will Uber’s IPO prove successful?
Being a pioneer has its advantages and disadvantages in pretty much every field and evidently, the transportation business isn’t an exception. It can either give you the upper hand over your closest competitors that might prove decisive in the long run, or it might simply allow your competitors to learn from the mistakes you made and use your own plans against you if you fail.
The latter seems to be the case with Uber and Lyft. By becoming the first to get shot down from the sky, Lyft has given Uber a sizable advantage as far as planning and the entire IPO process goes. So now is a good time to find out about no deposit bonuses in 2019 from one of the top rated brokers on the market and getting ready to load up on some Uber stock.
First of all, Uber now has complete access to the financial documents of Lyft. This is essential when conducting an IPO. The company reveals all of its financial documentation to ensure that the potential investors aren’t getting duped. With this information at their fingertips, Uber can begin to run the documents against its own, study them in detail, and evaluate its own
First, Uber will have full access to Lyft’s financials. Part of the IPO process is revealing complete financial documents. Uber can fully scrutinize its own financials against Lyft and pitch its IPO and value accordingly.
Furthermore, investors will have an easier time deciding on their investment as well. When the Uber IPO launches, the company will also reveal its financials. Traders will be able to run the two financials back to back. This will make it much easier for them to contribute to forming a realistic and sustainable IPO price point. This was not possible before, as Uber had only released part of its financial documentation in the past.
Uber and other companies are revising their IPO gameplans
One of the most important factors in both of these financial documents is the margin of contribution. This is the figure that’s calculated by taking the overall revenue and subtracting the variable expenses.
Uber plans to give the investors a more toned down, realistic version of its operations and financial situation as opposed to Lyft, who was much vaguer in its reports. By providing traders and investors with a more realistic picture of its operations, Uber will likely inspire confidence. Especially in contrast with its competition.
Lyft’s failure was so impactful, that the shockwaves travelled beyond the industry. Not only Uber but Pinterest and other companies have also decided to reevaluate and revise their IPO gameplans after the figures from Lyft’s IPO started to roll in.
Pinterest toned its valuation down by $3 billion. The company currently stands at $9 billion as opposed to being valued at 12 just a while ago. Uber’s cut, due to the sheer size of the company was much more sizable as well. The ride-hailing company now values itself anywhere between 80 to 100 billion dollars. Before these events unrolled, Uber was closer to valuing itself at 120.
What’s Uber’s new gameplan?
Uber will sell $10 billion in shares, making the event one of the biggest initial public offerings ever. Uber plans to address the concerns about its financial situation in its IPO pitch. The company suffered a loss of $1.8 billion in 2018 raising investor questions about the state of its market and the state of the company itself.
The company which was last valued at $76 billion will start its investor roadshow somewhere around April 29. This will begin the process of determining its IPO price. The trading on the New York Stock Exchange will begin in May.