Published: Sun, April 14, 2019
Money | By Ethel Goodwin

Uber files IPO documents with warning it may never make a profit

Uber files IPO documents with warning it may never make a profit

Uber Technologies Inc. filed for an initial public offering, starting the clock on what's expected to be the biggest USA listing this year.

The company is on track to price its IPO and begin trading on the New York Stock Exchange in early May.

It now operates in more than 63 countries and 700 cities around the world.

"We expect our operating expenses to increase significantly in the foreseeable future, and we may not achieve profitability", the company wrote in its filing. The company said in the filing that it lost US$1.8 billion in 2018, excluding certain transactions, on revenue of US$11.3 billion.

Travis Kalanick, the former CEO who resigned in 2017 under pressure from the board, is one of Uber's largest shareholders, owning almost 9 per cent of the ride-hailing company's stock.

To lessen the surprise of its losses when it did finally go public, Uber has disclosed its quarterly results for two years even though, as a privately held company, it was not obligated to do so.

The offering is expected to be among the 10 largest of all time.

Lyft's poor stock performance bodes ill for these IPOs, especially for companies like Uber with no profits to show. "The primary issue is around the underlying metrics that Uber will discuss around take rates, ride sharing data, driver ecosystem, and a myriad of other metrics relative to Lyft which may put the company in a more negative light". "Any such reclassification would require us to fundamentally change our business model", Uber said.

Uber in 2018 had $11.3 billion revenue, up around 42 percent over 2017, but below the 106 percent growth the prior year. Only $165 million in net revenue came from Uber Eats.

Since Uber had been seeking a valuation between $90 to $100 billion, followed by a modest performance of its smaller rival Lyft Inc following its initial public offering later last month, an IPO of such havoc size would make Uber Technologies Inc.

"There's no discernable way these companies are valued".

But Uber's growth was slowed by a raft of scandals beginning in 2016 that ultimately led to the ouster of its CEO, Travis Kalanick. Analysts consider building scale at a critical mass a crucial order for Uber's business model to become profitable.

Last year, the company brought in $2.6bn in the first quarter of the year, and $3bn in the final quarter, a much.

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