Uber IPO is one of the most anticipated event on the American market.
What is IPO and why Uber needs it?
This is the first public emission of stocks. It means, that the company offers its shares on the stock market for all the investors who would like to buy them. This important step will give Uber such opportunities:
- Attract investment.
- Improve image, status, and credit rating of the company.
- Get an objective assessment from investors.
- Diversify business.
- Enhance the level of corporate management and transparency of functioning.
Uber is going to place 180 million shares on the stock market. The supposed price range is 44–50 $ for a paper. If Uber places such number of shares at this price, it will have an availability to attract between 7,9 and 9 billion dollars. On the upper bound the company is going to cost almost 84 billion dollars. And in case of taking into account the papers which are not included into the total outstanding shares, the value of Uber can reach 91,5 billion dollars. These calculations were made by Bloomberg. They don’t coincide with the previous bank and press forecasts, which predicted 100 – 120 billion dollars.
The reasons for discrepancy
The main causes of the decrease of estimation of cost are:
- Problems, that the main Uber’s rival (Lyft) has. Lyft’s shares has dropped in value by 30 % since the moment of IPO. So, the trust in Uber has also decreased.
- American and European drivers’ plans to go on strike, demanding employment security and improving salaries.
When will Uber take this step?
The company has already submitted the first application on the New York Stock Exchange IPO on the 11th of April. The shares are supposed to appear in a public access on the 10th of May.
What management and drivers will get?
Uber claims, that in case of a successful IPO process, C.E.O. will get an option on 1,75 million company’s shares. Financial Times has estimated their cost in 170 million dollars.
As for drivers, they will be given some bonuses in order to have an opportunity to buy stocks:
- 100$ for 2500 drives;
- 500$ for 5000;
- 1000$ for 10 000;
- 10 000$ for 20 000 drives.
The only requires are that the last trip should be made in 2019, and passengers’ feedback should be positive.
The main risks
- Highly competitive environment.
- Amendment of legislation. Uber can be damages, if drivers are admitted as the company’s employees, instead of independent contractors.
- Bad reputation.