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Reliance Trading Co. Limited – Uber Prices its IPO and What to Watch in the Markets
The ride-hailing giant is set to price its long-anticipated IPO on Thursday, with shares on track to begin trading on the New York Stock Exchange on Friday.
By: Reliance Trading Co. Limited
Assuming a $47-per-share IPO pricing, Uber's fully-diluted valuation would be about $86 billion – down sharply from the as much as $120 billion valuation floated earlier this year.
A spokesperson for Uber did not immediately respond to Yahoo Finance's request for comment.
Uber has reportedly pared down expectations for its IPO amid signals of a market less amiable to a new entrant — especially one with as high an implied valuation as Uber's.
Namely, the company's public stock offering comes on the heels of a sudden stock market drop this week and an underwhelming public debut by peer ride-hailing company Lyft. These factors have likely influenced Uber and its IPO underwriters to temper investor expectations heading into this latest public offering, some observers have speculated.
"We continue to view Lyft's stock performance and lack of disclosures going forward (bookings, take rates) as the 1-2 punch, which coupled with a choppy tech tape caused Uber to look at a more conservative price range based on its demand for its IPO, a prudent strategy in our opinion coming out of the box," Reliance analyst Jon Denver wrote in a note Wednesday.
Lyft's IPO has been viewed by many as a proxy for Uber's performance, given the essential duopoly of the domestic ride-hailing market, with Uber at 67% of U.S. market share and Lyft at 33%, according to Edison Trends. By that measure, the former's more than 26% stock decline from its IPO price has cast a dark shadow over the latter's forthcoming offering.
However, many analysts have warned against conflating the two companies, especially given their differing business strategies.
"We continue to view Lyft as a one-trick pony domestic ride sharing player and 'little brother' to Uber, which has clearly established itself as the clear #1 player and in our opinion is paving a similar road to what Amazon did to transform retail/e-commerce and Facebook did for social media," Denver said.
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