Uber Pricing: What Does It Mean?
April 26, 2019 | Blog

Uber Pricing: What Does It Mean?

After months of rumored expectations surrounding Uber Technologies, the global ridesharing giant, has finally provided potential investors a preliminary pricing range for its upcoming IPO. While the range provided suggests the company is tempering earlier expectations, the magnitude of this offering cannot be understated – this will be the largest tech IPO of the past five years and the third largest in history – behind Alibaba and Facebook. The new filing provides a number of signals:

  • Uber’s preliminary range (subject and likely to change) suggests the company will raise up to $10 billion at an implied valuation between $74 and $84 billion. The company’s last primary financing round valued Uber at approximately $72 billion. The preliminary pricing represents a nearly 17% increase over its last private financing. That figure falls short of the $120 billion repeatedly quoted over the last few months, but it is still a healthy pop for current private investors.
  • Even at this range, Uber’s IPO will be the second-largest U.S. tech IPO in history and a boon for those who invested early. In March 2011, Uber’s Series B valuation was just $346 million. Over the next four rounds to Series F, Uber’s valuation soared nearly 15 times to $51 billion. The Uber windfall should have very positive implications for the entire venture ecosystem, including the list of blue-chip venture firms, institutional investors and corporate players who will now have more capital to direct to emerging companies.
  • Uber appears to be following the same IPO strategy as the three major tech IPOs this year – Lyft, Pinterest, and Zoom. Ultimately, all three priced their IPOs above their first filing range. We expect Uber to do the same. At the high end of the current range, Uber’s IPO will command a 7.4x TTM revenue multiple. As of this morning, Lyft was trading at a 7.5x TTM revenue multiple. Any subsequent increase in price range will drive up the resulting multiples for Uber. The final delta between Uber’s and Lyft’s multiples will serve as a telling and illuminating marker about how much investors value Uber’s diversification in services and scope vs. Lyft’s pure-play ridesharing. Lyft’s performance on the public markets is clearly influencing Uber’s expected IPO valuation.
  • PayPal’s $500 million private placement purchase is certainly of interest. Beyond financial motivations, this investment and continued partnership shows the importance for Uber of providing seamless in-app payments to accompany its suite of services, and PayPal’s determination to be the “platform partner of choice’, per PayPal CEO, Dan Schulman.

We will be eagerly following the company as it proceeds through its roadshow for what should be a truly historic IPO.

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Securities referenced in this article may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

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Copyright SharesPost, Inc. 2020. All rights reserved.

PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

This article does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

Securities referenced in this article may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2020. All rights reserved.