It would have been bad enough for Uber if the company’s long-awaited IPO occurred during the same week that US-China trade tensions roiled the stock markets. Or if the offering came just a few days after rival Lyft posted eyebrow-raising losses in its first quarter as a public company. Or if Uber’s drivers planned a strike in the lead-up to the listing in protest of Uber’s pay practices.
Instead, all three things happened. And now, Uber is planning to price its IPO at or below its midpoint price of $47 per share, per reports, which would give the company a fully diluted valuation of $86 billion or less. That’s likely up from the $76 billion valuation Uber reportedly attained with its last round of private funding, but several billion shy of figures that have been thrown around in recent months.
It’s been a little less than two weeks since Uber announced an IPO price range of $44 to $50 per share, equating to a valuation range of about $80.5 billion to $91.5 billion. Earlier this week, Bloomberg reported that the listing was at least three times oversubscribed, enough to price at the upper end of its range if so desired—healthy demand, to be sure, but quite different from a Lyft IPO in late March that was reportedly 20 times oversubscribed.
The fate of Lyft in the intervening weeks is surely one reason Uber’s offering isn’t looking quite so gargantuan as once expected—although it will still be one of the largest VC-backed listings of all time. Since stock in Lyft closed its first day of trading at more than $78 per share March 29, the price of those shares has fallen more than 30%, dipping below $53 Wednesday to reach a new all-time low. The company now has a market cap of $15.1 billion, the same as the valuation that came with its final round of private VC funding last summer.
A single-day drop Wednesday of nearly 11% came a day after Lyft reported its financial results for the first time as a public company, including a net loss for 1Q of more than $1.1 billion. While the company chalked up some of those losses to IPO-related expenses, it’s also a reminder to investors that profitability is still very far away. Lyft lost $911 million for the whole of 2018, compared with a $1.8 billion loss for Uber.
Those losses are, of course, at odds with Lyft and Uber’s sky-high valuations and revenue figures, a quasi-contradiction that could be interpreted a number of ways. As an example, one can look to the ridehailing companies’ ongoing labor dispute with their drivers, which on Wednesday took the form of a boycott by Uber and Lyft drivers in cities across the US, the UK and Australia. Those drivers—who are, of course, regarded as contractors, not employees—see all that money flowing in and wonder why they, the people who actually allow Uber and Lyft’s apps to function, can’t get a little bit more of it. The companies, meanwhile, can point to the losses as a reason thriftiness is required.
That argument perhaps crumbles a bit when Uber’s two top executives reportedly took in more than $90 million in compensation last year. There’s certainly enough money to make sure some people become immensely wealthy. Labor just isn’t on that list.
And depending on the IPO price Uber ultimately settles on, by the end of the week, there might be a little bit less wealth to go around than everyone expected a few months ago.