Coverage: Uber IPO to value company at $100 billion

Uber will seek Thursday to begin selling roughly $10 billion in stock in an initial public offering and attain a valuation of between $90 million and $100 billion and become the largest tech IPO since Chinese e-commerce business Alibaba in 2014.

Cameron Albert-Deitch of Inc. magazine had the news:

The registration will provide investors with their most complete look yet at Uber’s financial and operational numbers and strong points of comparison to rival Lyft’s IPO registration in March.

Uber’s projected valuation would be higher than its most recent private valuation of $76 billion, but less than its rumored $120 billion target–likely a recalculation due to Lyft’s slow entrance to the public market. Lyft’s stock debuted last month at $72 per share before quickly dropping below that mark thanks to concerns about the company’s future profitability. On Tuesday, Lyft’s shares closed at $67.44.

Uber CEO Dara Khosrowshahi will seek to ease similar concerns during his company’s IPO roadshow, which is reportedly scheduled for late April. The company hasn’t yet disclosed the number of shares it will offer or its intended price range.

Shannon Bond of The Financial Times reported that investing in Uber comes with legal risks:

But those documents will include lengthy disclosures on its pending lawsuits and government investigations, including any lingering issues dating back to its days under hard-charging former CEO Travis Kalanick, said lawyers and corporate governance experts.

“With Uber, given their previous CEO and history, there are more risk factors” than with other companies, noted Jay Ritter, an expert in initial public offerings at the University of Florida.

At the top of that list of risk factors is the very structure of Uber’s business, which relies on a workforce of drivers whom the company does not consider employees — and therefore does not have to meet regulations governing pay and benefits.

That has kept labor costs down for Uber and its peers in the gig economy, but it has set off legal claims from workers who want better terms and invited scrutiny from regulators around the world.

Maureen Farrell of The Wall Street Journal reported that the valuation is below previous expectations:

The current expectations fall below the valuation of as much as $120 billion that Morgan Stanley and Goldman Sachs Group Inc., the lead underwriters, had pitched as a possible public offering price tag last year.

Likely contributing to Uber’s decision to take a conservative tack on valuation is the disappointing debut of smaller rival Lyft, which went public at $72 a share late last month.

That price was well above Lyft’s last private funding round and higher than the initial range targeted by the company and its underwriters. But after spiking on its first day of trading, the stock has been buffeted by waves of selling. On Wednesday, Lyft shares fell 11% to $60.12, hurt in part by news of Uber’s valuation expectations.