Ride-hailing Giant Uber Files for IPO, Says 'May Never Make Profits'

Andrew Cummings
April 14, 2019

While regulators and the government authorities inquire whether any laws broke while constructing the world's largest ride-hailing support uber is forging ahead with its first public offering of stock.

"We will not shy away from making short-term financial sacrifices where we see clear long-term benefits", Dara Khosrowshahi, Uber CEO, states in the application.

The investment bankers handling Uber's IPO are expected to show a pricing scope for Uber's shares later this month before going to a so-called road show created to drum up interest in the IPO among institutional investors that will receive the first opportunity to buy the inventory before it starts trading in the New York Stock Exchange next month.

Its number of monthly users, who turn to Uber for not only rides but also services like food delivery, was 91 million last year, up 34 per cent from a year earlier.

At the same time, Uber costs continue to grow, with a figure of $ 14.3 billion a year ago, which is 19% more than in 2017.

Uber set a placeholder amount of $1 billion but did not specify the size of the IPO. The company said it sustained an operating loss of $3 billion.

Lyft beat Uber to the stock exchange last month with an IPO that raised $2.3 billion, but its shares have been backsliding following an early run-up. The food delivery service reached $7.9 billion in gross bookings in 2018, more than double the amount it reported the year prior.

Going public doesn't guarantee the company will make money.

In 2017 Uber's toxic culture resulted in a campaign that saw hundreds of thousands of people delete their accounts, an issue that is addressed in their IPO. And it is very likely to be the largest among US tech companies because Facebook took its bow on Wall Street seven decades ago in a time when most people had never considered using a program in their smartphone to summon a ride from strangers driving their own cars.

When offering ways to get around with scooters and bicycles uber is growing in other markets such as cargo.

Uber launched a black vehicle service in which clients are able to hail professional motorists with a couple of taps on a smartphone, as UberCab in 2009. It shortened its name to Uber in 2010, distancing itself from the taxicab industry, which has criticized the company for operating under less regulation than the traditional taxi industry. TOI previously reported Uber was looking to sell its food delivery business to Swiggy here, but the talks have paused for now due to regulatory and tax complexities.

In its filing, Uber said it made a profit of US$997 million past year, largely from selling parts of its business in places like South-east Asia and Russian Federation. The setbacks have contained uncontrolled sexual harassment and allegations it destroys self-driving vehicle technology.

The blowback in the problems assisted Lyft pickup soil in the USA and contributed to the ouster of both Uber co-founder Travis Kalanick CEO in 2017. The company also warned that potential future regulations or increases in insurance costs could impact the autonomous vehicle business.

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