Uber S-1: Uber’s Goal is to Own Mobility — All of It
April 11, 2019 | Blog

Uber S-1: Uber’s Goal is to Own Mobility — All of It

The time has finally come. Uber, the global ridesharing giant and most valuable U.S.-based private tech company, has made public its registration document in advance of an IPO to come as early as next month. We will be dissecting the 300+ page document over the following weeks, but some interesting information jumped out at our first pass, including a number of strong indicators for the company. We believe these signs, some of which are outlined below, may translate to strong demand on Wall Street, potentially resulting in a valuation above that of its last private funding round.

Significant Addressable Market: The company estimates the “Personal Mobility” total addressable market opportunity at $5.7 trillion. They claim to only have penetrated <1 percent of their current addressable market– a sign that growth may not be tapped. We must note that this level of penetration has come at a steep price and if that cost doesn’t diminish going forward Uber will be strained to get out of the red.

Positive Signs for Operations: The company appears to be controlling costs gradually. Operating losses in 2018 decreased over 25 percent from the year prior, returning to levels seen in 2016, despite revenue being 3 times higher. If this trend continues, Uber could be positive on operating margin basis sooner than previously expected.

Diversification, in Services and Geography: Falling in line with the Uber narrative of broad reach, 52 percent of gross bookings in Q4:18 came from outside the U.S. Additionally, Uber Eats is increasing its proportional contribution to net revenue. 2018 was 8 percent, up from 1 percent two years earlier. Uber Freight even contributed $125 million to revenue in Q4:18.

Uber, the “Ridesharing Holding Company”: The $997 million net income posted by the company is largely attributable to the nearly $5 billion in proceeds from the sale of both its Russian and Southeast Asian operations. One important consideration is the equity position Uber maintained in the local competition upon exits. For Russia, Uber estimates an equity position of 38 percent in MLU B.V., a company formed with Yandex, the remaining ridesharing company. Similarly, Uber received a 23 percent equity stake in Grab upon exiting Southeast Asia. It appears that, despite removing operational risk in those geographies, Uber’s bottom line stands to grow if the global rideshare market does.

Burning Cash, But Significant Cash on Hand: Cash burn from operations was $1.5 billion, but the company, before the IPO cash influx, has $6.4 billion on hand in cash and cash equivalents. A common question when these loss-generating companies come to market is: how long before they have to raise more money? Based on Uber’s cash flow statement and balance sheet, that road is long.

Slowing Growth & Significant losses: Uber saw revenue growth of 42 percent from 2017 to 2018, a stark decrease from the 106 percent enjoyed the over previous year and significantly below the 103 percent posted by competitor, Lyft. Uber’s operating losses totaled over $3 billion in 2018.

Uber chose to use a preliminary placeholder of $1 billion for the capital they are looking to raise, a substantial departure from the $100 million preliminary figure we typically see from other issuers in their public filing debut, including Pinterest and Lyft. We’ll see if this positivity carries through the company’s roadshow, but one thing that’s hard to argue is that this offering will likely make a splash on Wall Street.

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CONFLICTS

This report is distributed by SharesPost Financial Corporation, a member of FINRA/SIPC. SharesPost Research LLC, SharesPost Financial Corporation, and SP Investments Management, LLC, an investment adviser registered with the Securities and Exchange Commission, are wholly owned subsidiaries of SharesPost, Inc.

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The analyst(s) certifies that the views expressed in this report accurately reflect the personal views of such analyst(s) about the subject matter therein, including all of the subject securities or issuers, and that no part of such analyst compensation was, is, or will be during their employ directly or indirectly related to their specific views contained in this report.

Analyst compensation is indirectly based upon the growth and success of SharesPost, Inc., including the overall performance of its subsidiaries, the individualized performance of any such analyst, and the development and progression of the overall research effort. SharesPost, Inc. earns revenue from, among other avenues, brokerage sales, and therefore the analyst may indirectly benefit from research reports that have the ultimate effect of increasing trading activity, either through SharesPost Financial Corporation and/or with SharesPost Investment Management, LLC.

DISCLAIMER

This report does not contain a complete analysis of every material fact regarding any issuer, industry, transaction, or security. The opinions expressed in this report reflect the judgment of the analyst at a specific point in time and are subject to change. The information contained in this report has been obtained from sources the analysts consider to be reliable; however, there is no guarantee the any of the information is accurate.

Securities referenced in this report 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. 2019. All rights reserved.

Alejandro Ortiz

Alejandro Ortiz

Alejandro is a Research Analyst, Private Investment Research for SharesPost Research LLC. Prior to joining SharesPost, he was a Valuation Analyst at Duff & Phelps with a focus on TMT industries.

PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

CONFLICTS

This report is distributed by SharesPost Financial Corporation, a member of FINRA/SIPC. SharesPost Research LLC, SharesPost Financial Corporation, and SP Investments Management, LLC, an investment adviser registered with the Securities and Exchange Commission, are wholly owned subsidiaries of SharesPost, Inc.

Recipients who are not market professionals or clients of SharesPost Financial Corporation should seek the advice of their own financial advisors before making any investment decisions. None of the information contained in this report represents an offer to buy or sell, or a solicitation of an offer to buy or sell, any security, and no buy or sell recommendation should be implied, nor shall there be any sale of these securities in any state or governmental jurisdiction in which said offer, solicitation, or sale would be unlawful under the securities laws of any such jurisdiction.

This report 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.

ANALYST CERTIFICATION

The analyst(s) certifies that the views expressed in this report accurately reflect the personal views of such analyst(s) about the subject matter therein, including all of the subject securities or issuers, and that no part of such analyst compensation was, is, or will be during their employ directly or indirectly related to their specific views contained in this report.

Analyst compensation is indirectly based upon the growth and success of SharesPost, Inc., including the overall performance of its subsidiaries, the individualized performance of any such analyst, and the development and progression of the overall research effort. SharesPost, Inc. earns revenue from, among other avenues, brokerage sales, and therefore the analyst may indirectly benefit from research reports that have the ultimate effect of increasing trading activity, either through SharesPost Financial Corporation and/or with SharesPost Investment Management, LLC.

DISCLAIMER

This report does not contain a complete analysis of every material fact regarding any issuer, industry, transaction, or security. The opinions expressed in this report reflect the judgment of the analyst at a specific point in time and are subject to change. The information contained in this report has been obtained from sources the analysts consider to be reliable; however, there is no guarantee the any of the information is accurate.

Securities referenced in this report 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. 2019. All rights reserved.