Wednesday, May 27, 2020

Uber to Offer Stocks Worth $10 Billion During Initial Public Offering

Uber Technologies Inc, a San Francisco-based company that has made provision for people in 70 countries to rent a car, bike, scooter, etc. intends to run an initial public offering (IPO). The company will sell stocks worth $10 billion in order to increase its market valuation, reports Forbes on April 10.

Sources Close to Uber Reveals its Plans to Run an IPO

Based on the report, sources close to Uber revealed that the transportation network company will run an IPO on April 29 where stocks valued at $10 billion will be sold. The asset will be launched on the New York Stock Exchange in early May. However, the news will be made public on Thursday when the company will be seeking the approval of the U.S. Securities and Exchange Commission (SEC).

Furthermore, a recent assertion of the company revealed that it has a valuation of $76 billion. Thus, it seeks to increase it to $90 billion and $100 billion through public sale. The later is a decline from the $120 billion which Investment bankers had previously said would be its valuation during an IPO.

Competing With Lyft, Uber’s Closest Rival

One more reason for the proposed IPO is to compete with its rival Lyft who had recently carried out its IPO valued at $2.34 billion. The asset was listed on Nasdaq on March 29 even though its price has plunged from the $72 it was sold during IPO to around $67.44. Seaport Securities has even predicted that it could go as low as $42.

In comparison to Uber, the latter had first filed its IPO with the SEC in December even though it allowed Lyft to take the stage first. The poor performance of Lyft’s offering will probably make Uber sit up during the launch of its own. It will have to be more cautious and realistic in order to be more successful.

Uber’s IPO to be the Largest Since That of Alibaba Group Holding Ltd

That aside, Uber’s IPO will be largest of its kind after the last one by Alibaba Group Holding Ltd, a Chinese e-commerce giant in 2014. A higher percentage of the stocks that will be issued during the IPO will come from Uber while the other part will be from existing customers that are cashing out.

Furthermore, Dara Khosrowshahi, Uber’s chief executive has been tasked with the duty of explaining to potential investors that the company’s business and culture has changed. It is coming after the company was allegedly involved in a series of scandals in the past two years. Among these are issues pertaining to sexual harassment, bribery overseas, and a data breach which was hidden from regulators.

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