On April 11^th 2019, Uber Technologies Inc. filed an S-1 registration, opening the path towards its initial public offering. And thus, one of the most anticipated IPOs in history was born. The tech and transportation giant offering up its shares to the public will be a real test for the maturity and stability of a company which is no stranger to controversy.

As with all IPOs of large companies, the public listing can represent an immense opportunity for investors. But opportunities never come risk-free. So, make sure you know as much about Uber as you can before deciding to jump in the ring and investing!

The unicorn, the IPO and the button

Uber – The road so far

What if you could have a car pick you up in a couple of minutes at the push of a button? That was the dream of founders Travis Kalanick and Garrett Camp back when they founded the company in 2009.

10 years later and Uber operates in over 65 countries worldwide and has a market share of close to 70% in the United States. The company is one of the pioneers of sharing-economy, aiming to operate as a bridge between people who offer temporary access to their personal assets or services. In this case, doing what your Mum and Dad always told you not to do: getting in a car with a stranger.

Ten years later, Uber crossed quite the bumpy road. Rapid expansion, becoming a multibillion-dollar enterprise and strong diversification were also met along the way with scandals of alleged sexual harassment, resignation of its CEO and cofounder and opposition from taxi drivers and regulators worldwide.

And still, here we are, 2019, probably less than a month away from Uber going public. What will this next step in the company’s life bring?

Wait, what is an IPO anyway?

Private companies have the option to open up their ownership and sell small or large parts (shares) of themselves to the public. When they first sell their shares, they do so through an initial offer so the free market can own and value what their stock is worth. Hence the name: Initial Public Offering (IPO).

A company going public could be a sign of it maturing and being confident enough in their product so they can essentially raise more capital through the public investing in it. But not all large successful corporations are public. Enterprises like Ikea or Mars are private entities worth billions.

For Uber, going public will mean gaining some while losing some. Although the company will most likely raise a very important amount of capital so it can expand and grow, the IPO will also mean public scrutiny of the company, much more transparency in day-to-day operations and overall less room for error on the part of management. You get the cash, but you will be under a massive magnifying glass.

How could the Uber IPO play out?

Ok, so what do we know? We know that Uber will most likely go public in May 2019 on the New York Stock Exchange, under the ticker UBER. What don’t we know? Well, really, most everything else.

According to various sources, Uber is seeking to sell roughly 10% of the company for $10 billion at a valuation of $100 billion, with shares being between $48 and $55. These figures put Uber up there along other big IPOs. Facebook managed to raise $16 billion with its offering back in 2012, while Alibaba Group managed to gather a whopping $25 billion when it went public in 2014.

But how much is a company worth? How reliable is it to believe the estimates of only the people and institutions that are invested in a company before its IPO? This is were the practice is more art than science. Doing a thorough and profound analysis of a company can bring you quite close to how much a company is really worth.

Things like how much its assets are worth, what the Profit/Loss ratio is, percentage revenue growth, its own investments and brand recognition are all things that you can put a number on. But even so, the market can deem it too expensive or too cheap based on mass psychology and sentiment. Therefore, the safest bet for correctly valuating an IPO is valuating it more within a price area rather than a fixed sum.

For Uber, the company’s target is a valuation of $100 billion. To be somewhat safe, markets assume the IPO will close somewhere in the range of $70-$120 billion. Right when it will float, the price may likely go up and down like crazy just due to the sheer amount of anticipation and market enthusiasm for the stock.

Uber is a very well capitalized company with a lot of funding behind it and a recognised brand but hugely unprofitable, fighting regulators on several fronts and no stranger to controversy. The price at the end of the IPO’s day is anybody’s guess.