October 18, 2018
If Uber Technologies goes ahead with its much-anticipated IPO sometime next year, its valuation could be higher than those of General Motors, Ford and Chrysler combined. Goldman Sachs and Morgan Stanley recently delivered proposals to the ride-sharing giant that put the company’s value at up to $120 billion, the Wall Street Journal reported.
Its meal-delivery platform, UberEats, alone is worth as much as $20 billion, according to the WSJ. That’s twice the stock-market valuation of GrubHub, and more than the $15-billion value of Uber’s most formidable rival, Lyft.
In fact, a key element in Uber’s eye-popping IPO market value, the WSJ reported, is the company’s businesses outside its ride-hailing app—such as UberEats, which operates in nearly 500 cities globally and is expected to turn a profit before the ride-hailing business does. That 12-figure valuation also takes into account Uber’s stakes in other transportation startups, including China’s Didi Chuxing Technology and India’s GrabTaxi Holdings.
Another business seen as having strong potential, albeit on a standalone basis, is Uber’s self-driving car unit. The WSJ reported that spinning off the self-driving unit could free it to license its technology to a wider array of car makers and transportation companies.
There’s no guarantee that Uber will go public on the timeline announced recently by new CEO Dara Khosrowshahi, which called for an IPO in the second half of 2019. However, an agreement with investor SoftBank Group—which made headlines earlier this month with plans to invest as much as $20 billion in WeWork—reportedly gives Uber until the end of next year to stage an IPO. Failing to do so, the WSJ reported, would obligate Uber to allow certain larger investors to sell their shares on the secondary market.
Even with that apparent ultimatum, though, there are also no guarantees that the $120-billion target established by Morgan Stanley will be achieved in an IPO. For one thing, “the IPO market runs notoriously hot and cold, and though 2018 has been a strong year for technology and other issues, conditions could be less favorable when Uber is ready to list its shares,” according to the WSJ.
There’s also the fact that unlike in 2009, when Uber was founded, the company is no longer the only ride-sharing game in town. Lyft is also planning an IPO for next year, and the WSJ noted that newer rivals, including Via Transportation Inc. and Gett Inc., have raised cash from investors including Daimler AG and Volkswagen.
Still, many sets of eyes will be watching for that IPO in 2019. As the WSJ observed, “Uber is seen as a bellwether for a crop of highly valued startups that have delayed tapping the public markets.”
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