The company is scheduled to go public on Thursday.
It’s a big week for the stock market as 15 companies prepare to go public. And one of those companies is Uber.
Uber’s IPO will be one of the largest for the technology industry. The company is expected to go public on Thursday, just weeks after rival Lyft went public.
Uber has made several adjustments to its upcoming valuation. In the fall, it was expected to receive a valuation of $120 billion. Last month, Uber indicated it would set its valuation at $100 billion. But last week, the company set its price range with a total valuation of $91 billion.
The Lyft Effect
These changing numbers have likely been influenced by Uber’s rival Lyft. Lyft went public at the end of March and the company has gotten off to a rocky start.
Its shares have fallen nearly 20% below its IPO price. On Tuesday, Lyft will give its first earnings report since first going public.
With the two companies going public within such a short time frame, inevitable comparisons emerge. But Uber and Lyft, though competitors, do have slightly different business models.
Lyft focuses solely on ride-sharing and is focusing its efforts in the U.S. alone. Uber is focused on building a global company and has set its sight on food delivery and freight.
But both companies are losing large amounts of money every year and have no clear path to profitability. Uber alone lost $2.3 billion in 2018.
But so far, analysts seem to prefer Uber over Lyft. For instance, Wedbush’s Ygal Arounian said that Uber has the advantage thanks to its robust platform and logistics expertise.
Other Challenges That Lie Ahead for Uber
One of the biggest challenges Uber will have to overcome is how to hang onto its drivers, who are becoming increasingly discontent with their lackluster earnings.
On Wednesday, Uber and Lyft drivers announced they would strike from 7 AM to 9 AM in anticipation of Uber’s IPO. The drivers are protesting low wages, their independent contractor status, and the lack of regulations governing drivers.
Lyft and Uber classify its drivers as independent contractors, not employees. This means they are responsible for maintaining their own vehicles and paying for gas. This limits the amount of money they can earn per hour.
However, Uber only deducts 22% of earnings from fares, which is below the 30% expected range. However, it would be a risky move for Uber to increase the share it takes from driver fares.
Uber’s IPO will likely dominate news headlines for the majority of the week. However, Uber isn’t the only company that is set to go public this week.
A government contract company, six biotech companies, a bank, a Russian job site, and many other companies are all set to go public as well. So far, 2019 has been an exciting year for IPOs with Pinterest and Zoom also going public.