The stock market is declining while the IPO market is hotter than ever this week. At least 15 IPO deals are expected to be priced this week and this is the biggest week since 2015. What most investors are focusing on now is Uber which is the biggest U.S company deal since Facebook in 2012.
Uber is finish with its roadshow in London, Boston and San Francisco, and the company is expected to price the sale on Thursday this week. The demand for the stock is strong and investors have put in orders for at least three times the amount of stock on offer.
Uber can raise as much as $9 billion and if that happen it will be the largest this year. It`s not clear what the price for stock will be but I think that the turmoil in the market at the moment will have an impact of the price range.
Uber is offering 180 million shares for $44 and $50 and that will value the company at about $84 billion. They have $11 billion in revenue and about $50 billion in gross bookings. Like Lyft, they have big operating losses.
Last year, Uber lost $3,03 billion in the 12 months through March. This is the largest loss ever for a U.S startup in the year before an IPO, and they have a lot of challenges.
More than 82% of the revenue comes from ridesharing while 13% comes from food delivery. Uber has a deal with McDonalds and used to get a 20% commission on deliveries. McDonalds renegotiatied the deal, and now Uber gets a 15% commission.
Chief Executive Dara Khosrowshahi is trying to sell Wall Street his vision that Uber will become the dominant force in all forms of transportation. But the competition is intense in many places around the globe.
China have its own Didi Chuxing while India has Zomato and Swiggy for food delivery. Didi is also in Latin America where they compete with Doordash, and all of them in the food delivery business.
Uber and Lyft drivers are planning a strike from 7 am to 9 am on Wednesday to protest their wages, their treatment as independent contractors rather than employees, and the lack of regulation governing the new sector.
Drivers have challenged the ride-sharing companies many times for refusing to deem them employees, which means they are responsible for maintenance of their own vehicles as well as gas and insurance, which greatly reduces the amount they can earn per hour.
Their competitor Lyft went public in April this year and entered the market with its IPO price of $72 per share. The stock soared on their debut but it came down again as IPO`s usually does, and now the stock is trading about 16 percent below its IPO price.
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Ket Garden
Shiny bull 