Uber prices shares at $45, near bottom of expectations

Uber priced its public offering Thursday at $45 a share, near the bottom of its expected price range, valuing the ride-hailing company at about $82.4 billion, according to people briefed on the decision, who were not authorised to publicly discuss private deliberations. It raised $8.1 billion from the IPO, they said.

While the event solidifies Uber’s position as the biggest US technology company of its generation to go public, it will be a disappointment to the investors, executives and cheerleaders who had bigger dreams for it.

The ride-hailing behemoth — which will start trading its shares on the New York Stock Exchange on Friday — will nonetheless have a market capitalisation at its IPO that trails only that of Alibaba, the Chinese e-commerce company, which went public in 2014 at $168 billion, and of Facebook, which was at $104 billion when it went public in 2012.

Its $82.4 billion valuation, which factors in stock options and restricted stock grants, is above its last private fundraising valuation of $76 billion, from August. But it is below the $100 billion that Uber forecast to some investors this year — and well below the $120 billion that some of its bankers floated last year.

Its lead underwriters at Morgan Stanley, Goldman Sachs and Bank of America acted cautiously in recent days in pricing the IPO, the people briefed on the decision said.

Among their concerns: stock market turmoil driven by worries that the Trump administration’s trade war with China will continue, and concern about the financial performance at a rival, Lyft. Lyft went public in March, but its shares quickly fell; this week, the company posted a $1.14 billion loss for its first quarter.

There have also been questions from investors about Uber’s business model. The company faces significant competition in its ride-hailing and food delivery businesses, and price wars with an array of competitors in each market are expected to continue. It lost $1.1 billion in the first three months of this year alone, even as its revenue grows.

Prospective investors in Uber’s IPO showed huge interest near the bottom of the range, the people briefed on the matter said.

Chief on the bankers’ minds was avoiding the fate of Lyft, whose shares at Thursday’s close were 23% below their IPO price.

© 2019 New York Times News Service