In brief: Uber has revealed the details of their Initial Public Offering (IPO) and has included a few surprises in the mix. They’ll be listing a tenth of their shares, 180 million, on the public market for $44 to $50 per share. All in all, they’ll pocket $8-9 billion and walk away worth $90 billion should everything go to plan.
The time is ripe for Uber to have an IPO: they’re facing stiff competition from Lyft (who also just went public) and made a titanic loss of over $1 billion this quarter. Last year, they made $3.7 billion in the first quarter. They’re blaming high expenditure on increased advertising costs and dynamic market conditions, though their investments into self-driving tech are probably also costing a pretty penny.
“Building this platform has required a willingness to challenge orthodoxies and reinvent – sometimes even disrupt – ourselves. Over the last decade, as the needs and preferences of our customers have changed, we’ve changed too. Now, we’re becoming something different once again: a public company,” Uber’s CEO Dara Khosrowshahi writes in an open letter included in Uber’s S-1 form.
Part of the revenue from the IPO will no doubt go towards new payment processing technologies, which Uber is partnering with PayPal to deliver. PayPal is going all out in Uber with the company’s second largest investment ever of $500 million for “future commercial payment collaborations, including the development of Uber’s digital wallet.” PayPal is Uber’s largest payment processing platform in America and Australia.
In addition to Uber, shareholders are dropping another 27 million shares onto the market as part of the IPO. Of Uber’s portion, 5.4 million (3%) will be handed out to drivers. They’ll be able to cash them out or keep them and hope they grow in value. Compared to Lyft’s options, Uber is a bit kinder.
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Uber’s IPO will occur sometime next month and will be one of the largest IPOs in American history.