Big Bang entry: Uber set to hit the road for the year’s biggest IPO

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Published: April 27, 2019 9:32:14 AM

Uber Technologies Inc. entered the final stretch of the ultimate capital-raising exercise on Friday, when it disclosed details of an initial public offering expected to net the company and its backers another $8 billion or more.

The IPO will be the biggest in a busy year on U.S. markets but not the most unusual.

Over the past decade, Uber Technologies Inc. proved itself to be one of the most prolific young fundraisers ever. It pulled together more than $20 billion from private investors. After burning through more than half that amount in just the last three years, Uber will soon see whether it can recreate that magic on the stock market.

The ride-hailing company entered the final stretch of the ultimate capital-raising exercise on Friday, when it disclosed details of an initial public offering expected to net the company and its backers another $8 billion or more. Executives and bankers plan to hit the road next week to promote the stock to public investors and then ring the bell on the New York Stock Exchange floor on May 10, when the shares start trading, according to a plan obtained by Bloomberg.

Uber Chief Executive Officer Dara Khosrowshahi and his lieutenants will be joined by longtime allies from Morgan Stanley and Goldman Sachs Group Inc. on the roadshow, which starts Monday. Over the years, the two banks helped Uber arrange private debt offerings, convertible loans and equity sales. The company will take its expansive pitch — car rides, food delivery, autonomous cars, electric scooters, bicycle rentals — from London on Monday to New York on Tuesday, and then the company’s hometown of San Francisco on Thursday.

The projected IPO value is slightly lower than some early projections. Morgan Stanley and Goldman Sachs had pitched Khosrowshahi last year on an IPO value of as much as $120 billion. That also happened to be the price at which the CEO and at least four deputies would earn a substantial performance bonus. Instead, Uber is currently aiming for $84 billion, or $91.5 billion on a fully diluted basis, though that number could change depending on demand.

Uber hopes to avoid the fate of its smaller U.S. rival, Lyft Inc. Lyft has failed to maintain its IPO price, and the stock is down 21 percent. Uber intends to take a more cautious tack and manage investors’ expectations, said people familiar with the matter who asked not to be identified because the discussions were private. The approach, though, means it could leave easy money unclaimed, said Bryan Routledge, associate professor of finance at Carnegie Mellon’s business school: “The problem with an IPO is you typically sell your shares too cheap.”

An Uber video released Friday to promote the stock lacks the Wes Anderson-style levity of Lyft’s production, but it crams in a similar number of heavy-handed metaphors to convey a business in forward motion. It’s a half hour of executives talking up the company’s prospects while walking — sometimes practically running — toward the camera.

The IPO will be the biggest in a busy year on U.S. markets but not the most unusual. That honor may very well go to Slack Technologies Inc., which made its offering paperwork public on Friday. Slack and Uber share a common major stockholder in SoftBank and will list on the same exchange, but they’re running very different offerings.

Slack will directly list its stock in the coming months, bypassing the process of financial underwriters, roadshows and fundraising. That’s because Slack isn’t thirsty for more capital. The unprofitable business is sitting on more than $800 million from private investors, which is plenty for a business that makes chat software.

Uber is going the traditional route, in part because it needs the money. The company’s projections anticipate its nonexistent profit margins will be even worse this year. But investors should pay more attention to other numbers, Nelson Chai, the chief financial officer, urges in the IPO commercial. Gross bookings grew 45 percent last year, he said. A substantial driver of that was a metric Uber calls monthly active platform consumers, or MAPCs, which Chai adorably pronounces as “mapsies.” That number increased to 93 million last quarter, from 70 million a year ago.

The securities disclosure Friday included other numbers that tell a less ascendant story. It offered a range of guidance for last quarter’s performance, which indicates slowing revenue growth of about 19 percent to $3.1 billion and a net loss of about $1.1 billion.

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