Uber: Giant IPO hopes, and equally big losses

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Uber is seeking a staggering $100 billion valuation when it makes its long-awaited public debut, said Mike Isaac and Kate Conger at The New York Times. The transportation giant filed the prospectus for its initial public offering last week, and the numbers are striking. The IPO seems designed to rival that of Facebook, which went public at $104 billion in 2012. But while Facebook was profitable at the time, Uber lost $1.8 billion in 2018. That's one reason that "the prospectus renewed questions about how sustainable Uber's business actually is." Most of the fares paid to Uber go to drivers; last year, the company's ride-hailing business took in $41.5 billion in bookings, but only $9.2 billion of that came back to Uber — which has not laid to rest "persistent questions" about driver pay and working conditions. Still, Uber is making the case that it can seize opportunities "beyond its original ride-hailing mission" to disrupt industries ranging from food delivery to long-haul trucking. "I'm not sure I've ever read a more sprawling IPO document," said Shira Ovide at Bloomberg. It was 285 pages — 48 of them devoted to detailing "risk factors" that could jeopardize Uber's ambitions — plus 83 pages of financial statements. And for all that ink, still "it remains unclear whether there is lasting demand for Uber's two main products — on-demand rides and restaurant meal deliveries" — or if either will ever be profitable.

Profitable or not, for early investors Uber will "deliver one of the biggest jackpots in Silicon Valley startup history," said Rolfe Winkler and Scott Austin at The Wall Street Journal. The venture capital firm Benchmark gave roughly $9 million in early funding in 2011 — an investment that could be worth $8.25 billion now. But for ordinary investors, the stock offering is a gamble. Those who bought the hype around Uber rival Lyft have seen their stock's value tumble nearly 30 percent in three weeks. Also unlikely to benefit much: Uber's drivers, said Joe Nocera at Bloomberg, who get no regular salary or benefits. Some estimates find that "Uber drivers make less than someone working at McDonald's."

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Uber is "besieged by competitors on all fronts," said Eliot Brown at The Wall Street Journal. Revenue for Uber Eats, touted as a "shining star of rapid growth," actually fell in the last three months of 2018, because of sharp competition from rival ­startups — ​some funded by Uber's own investors. In its ride-­hailing service, "Uber has had to pour on subsidies and discounts" to keep up with Lyft and other challengers. Though bookings are growing, the revenue it gets to hold on to after incentives for drivers and discounts for passengers has stayed flat. Uber is probably going to "keep spending heavily to win market share" for a long time, said Shannon Bond at the Financial Times. The company plans to continue investing in incentives and promotions "if rivals opt to do the same." That means much of the money it hopes to raise from the IPO is probably going into more subsidized rides. That's Uber's winner-take-all mentality. "The question is, Where does it end?" asked one analyst.