Summary

Uber filed confidentially to go public next year.

The ride-sharing service still generates massive losses that the public markets won’t reward.

The company is a laggard in the robotaxi market leaving Uber at a competitive disadvantage.

The forecasted market valuation of $100+ billion isn’t sustainable.

 

As Uber (UBER) apparently finally filed documents for a potential IPO next year, the one certainty is that public investors should avoid this offering. The company follows fellow ride-sharing service Lyft (LYFT) in a race to go public, but the company has already fallen behind industry giants in the crucial self-driving race. The public markets won’t reward a money-losing company with the suggested pre-IPO value.

$100+ Billion Value

According to Bloomberg, bankers expect an offering valuation of over $100 billion and up to an absurd $120 billion level. Lyft is only valued in the $15 billion range, but beating Uber to the public markets could provide a marketing lift to the ride-sharing service.

The biggest issue with the valuation for Uber is that public markets hate money-losing operations while the private markets are more rewarding of all-out growth. In Q3, Uber lost an absurd $1.1 billion on quarterly revenues of $2.95 billion. Some of the highlights were as follows:

  • Q3 revenue was $2.95 billion, up 38 percent from the same quarter last year.
  • Adjusted net loss widened in the third quarter to $939 million; it was $680 million in Q2.
  • Adjusted EBITDA loss for Q3 came in at $527 million, which is down 13 percent year over year, but up 24 percent since Q2.

Clearly, the actual losses are not as bad as the headlines with the adjusted EBTIDA down at $527 million. The big, big problem here is that revenues only grew 5% sequentially while losses are still widening.

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