Just a couple months ago, December 2018, we saw confidential filings for both Uber and Lyft. Shortly after we had a month long government shutdown, which also put Unicorn Startups in a holding pattern. The shutdown pause of the rideshare giant startups may have hurt them, especially Uber.
Both companies are still waiting to see who will go first, in what has been called, a race to be the first rideshare service to IPO (Initial Public Offering).
What we know regarding these companies going public. Both companies confidential filings were both responded to by the SEC (Securities Exchange Commission), to resubmit their the filings, which was the first red flag that things weren’t as clear or correct as they needed to be. Lyft, hoping on a valuation of around $15 Billion, seems to be in line with most investment companies valuations of the company. Uber, on the other hand, was hoping on a $120 Billion valuation. This is where we see things getting tricky. The investment companies doing valuations on Uber are NOT seeing anywhere close to eye to eye on this, one thing for certain, none are seeing this $120 Billion valuation as realistic. At the moment, we have seen 7 companies put out their valuations on Uber ranging from $44 Billion to $90 Billion, and last March Uber’s valuation was $78 Billion. Uber has never had a profitable quarter since its inception, minus one quarter years ago, but that was not because of ride-share it was based on an Asset Sale and some tricky use of Taxes. I think it is fairly safe to assume that Uber’s value really hasn’t changed since its valuation last year, give or take, personally I believe they will be a bit under $78 Billion after the SEC is done going through all their supporting documentation.
Both Uber and Lyft, last December, started a nationwide cut of their drivers pay. They reduced the per mile rate for drivers, but added a few cents to the per minute rate, assuring drivers this would NOT effect their pay. Drivers have since seen their pay drop in almost every market we have looked into, the opposite of what the company told its drivers. The companies believe that there are enough drivers they were able to make this play, however, they did not account for the hurt loosing veteran drivers would have on the company. Yes, there are plenty of drivers for both companies, but so many of them drive part time or just stop working after a few weeks. In most cases these accounts are not closed by the driver, they just stop driving for these rideshare companies. This still shows them as active drivers on the Uber and Lyft networks. The timing of this pre-Christmas pay cut seemed to be linked to these two companies going public in 2019.
Uber has also been all over the map on what the company thinks it is? Is it a rideshare/ridehailing company? Or is it a technology company? Uber CEO Dara Khosrowshahi, tried convincing independent investors that UberEats (just recently DoorDash took over as the United States leader in app based food delivery, passing UberEats) and Advertising would be the companies future. They also spent $1 Billion on acquiring eBike company JUMP during the last quarter of 2018, an acquisition that left many puzzled. We know that eBikes and Scooter companies were blooming in 2017 into 2018, but Uber may have been a little late to that party, as it entered just after the tipping point of these transportation industries. Uber, has also spent huge amounts of money on autonomous testing. For those not familiar with the self-driving industry, Uber is not even a contender in this industry, Didi Chuxing Technology Company in fact is years in front of this technology. In fact Uber was sued by Waymo for theft of Intellectual Property, and that did not help the company in regards to how advanced their team actually was. Not to mention their past record of killing someone with one of their autonomous vehicles. There is also the money being spent Uber’s “Flying Taxi’s”, the company has since changed the direction of this to eVTOL (vertical take off landing), basically a mix of drones and helicopters. Right now this project is focusing on a 4 passenger flying vehicle. What needs to be figured in here is the FAA regulations and fees, airport fees, landing pads, vehicle cost, etc. Right now leaving this as a non-reality technology when you look at it from a cost perspective.
Lyft is facing some lawsuits currently, but nothing in comparison to the mountain of issues Uber faces. Whether these are lawsuits with Drivers, Self-driving, other Countries, employee/independent contractor, etc. The list is long and worthy of a article of its own. This is obviously crushing the companies worth, not to mention the slow growth of users coming to Uber, while growth for Lyft is holding steady numbers. The big problem right now for Uber is it is in desperate need of a money infusion. Private investors are not wanting to keep throwing money at a company that in its 10 years has never made a profit, leaving Uber to going public and hoping on getting the money they need from going this route.
When it comes to the NYSE (New York Stock Exchange) there is one thing only it looks at for a companies worth, and that is PROFITS! So where will this leave Uber once it goes IPO?
~sJ
Uber’s Q4 2017 net loss came to $1.1 billion. Uber’s Q4 2018 net loss after taxes was $865 million. But Uber’s Q4 2018 net loss before the impact of income taxes was -$1.22 billion.
In short, Uber had a $358 million (benefit from) taxes that I don’t think that anyone external to the company fully understands. And since I suspect that Uber won’t be able to gin up a similar bump every quarter, perhaps we should look at some more recent profit metrics to see if the company is getting closer, or further away from profitability.
Well, in Q3 2018 Uber’s operating loss was $773 million. In the fourth quarter of the same year, that figure swelled to a $1.06 billion loss.
I see you wrote about Uber buying Jump e-bikes, did Uber ever team up with Bird or Lime scooters?
I think most experts agree. It would best for the market for Lyft to go first. Most of us believe Lyft is undervalued and will trade high, whereas, Uber is going to be over-valued and will trade low. Time will tell.
It will be less than $1 Billion, current non-revenue tech markets are not what Uber needs. This company needs money, and can’t have another funding round before IPO.
Yes, for now. That could change post IPO but even that would most likely not be in 2019.
In December when driver rates dropped they dropped even more if you were doing to the rental program with hertz cars.
You published an article saying that Uber only has $1 Billion to spend on projects outside of rideshare this year, is that still the case?
Thank you!
thanks for sharing.
Nice to see an article from the perspective of the driver. So many articles around this IPO contradict each other, or are behind on their facts. I read an article today that said Uber Eats was leading the U.S. market, but we saw last week the facts that DoorDash had passed them. I have not seen one article stating that $120 Billion could happen only that Uber wanted that amount.