Uber is the highest valued tech company to go public since Facebook and Alibaba. Uber is part of a series of Silicon Valley companies to go public this year, including Airbnb, Zoom, and Slack.
Uber has had a rough go the past year, the company has been losing money along with constantly being surrounded by scandals – most recently with drivers going on strike.
Uber’s Valuation has been a rollercoaster
Late last year, Uber was expected to go public at a massive $120 billion! That would have made Uber more valuable than General Motors, Ford, and Fiat Chrysler – combined.
As we gradually got closer and closer to the public offering the valuation started to get more grounded in reality.
Earlier this week, Uber expected to price its initial public offering between $44 and $50 per share. The price settled at $45 leaving the disruptive tech company to be valued at about $75.46 billion. Uber is still one of the most valuable companies ever to go public, but the $75.4 billion valuation is a 38 percent drop compared to the estimated valuation from October 2018.
So what happened to Uber from October 2018 to now? A lot of things went into the dramatic fall of Uber’s valuation, but of all the biggest contributor is rival company Lyft. Lyft went public in March since then the stock has fallen 25 percent and the company has lost a staggering $1.1 billion in its first-quarter earnings.
Uber is not too far off, the digital taxi company already loses somewhere around $800 million a quarter. Uber is a much bigger company, it has an international reach and a handful of side businesses such as food delivery and freight.
A couple of things are clear, 2019 will be a year of peak loses for Uber and riders as well as drivers will likely see the end of cheap rides. Uber has already started to shift pricing in key markets like New York City. A new minimum wage law and a new “utilization rate” approved by the city forced the company to raise fares to account for the time drivers spend looking for passengers.
A number of other cities are exploring ways to lift pay for drivers, which could mean more pressure on Uber to raise fares. Other factors to consider is the false promise of “reducing traffic” in big cities, as ride-hailing gained popularity, so has traffic.
Though being one of the largest Silicon Valley “unicorn” companies to go public in years, Uber is still looking at rough roads ahead!
