Is Uber really worth $ 100 billion?

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Everything about Uber is great.

The taxi and delivery app is the largest US venture capital firm.

A US $ 10 billion (US $ 7.6 billion) fundraising is expected on the sale of its shares on the New York Stock Exchange – one of the largest ever.

And the 10-year company could be valued at $ 100 billion when it floats.

The other major badet of Uber lies in its losses, which, although lower than those of the previous year, reached $ 3 billion in 2018.

And this raises the most important point: when will Uber make a profit and justify this mbadive stock market valuation?

Dara Khosrowshahi, CEO of Uber, will face this issue in the coming weeks, as he embarks on a roadshow to visit potential investors in anticipation of the IPO scheduled for the May.

Which reception will Uber receive?

Uber is not the first of its kind to float this year.

Among the so-called unicorns – venture-backed companies valued at $ 1 billion or more – Lyft, Uber's closest US rival, was introduced at the end of March.

But until now, these initial public offerings (IPOs) have shown that there was some caution regarding the valuations. Lyft's share price has dropped 15.2% since its IPO.

Pinterest has valued its shares at between $ 15 and $ 17 each, giving it a value of up to $ 11.3 billion. However, this remains below the $ 12 billion valuation the company had in its last round of private financing two years ago.

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In this context, will Uber be able to reach this value of 100 billion dollars?

Kathleen Smith of Renaissance Capital said, "I sometimes think that they are a little deaf because they have lived in a world where everyone is engulfed so they can invest in their businesses.

"They then think" oh, that means they'll roll out the red carpet on the public markets "- and this is not that kind of place."

When will Uber make a profit?

It is unlikely that the company will make any money soon, according to the IPO documents filed Thursday.

"We have suffered significant losses since its inception, including in the United States and other major markets," he said. "We expect our operating expenses to increase significantly in the near future, and we may not achieve profitability."

It expects losses to continue in the "short term" because of larger investments in areas such as the increased use of its applications, the expansion on new markets and the further development of its autonomous car division.

In a letter to potential shareholders, Khosrowshahi said: "We will not fail to make short-term financial sacrifices when we see clear, long-term benefits."

Jordan Stuart, of Federated Investors Inc., says investors are willing to be patient when it comes to making a profit, but only if a company can say how it plans to do it.

Amazon, for example, only made an annual profit six years after its IPO in 1997. Even then, it was not until investors saw a sustainable path to profitability.

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Mr. Stuart said, "The title really moved, five or six years ago, when it was able to show:" Hey, we can turn off the investment to show profitability if we want and forego revenue growth for net profit growth but we "are not going to do that".

"Some of these companies, if they can show this scalability, this opportunity to turn on or off this type of profit, then I think investors … will give companies a chance to say" this is worth $ X billion. "

Uber sales are increasing. Revenues increased from $ 3.8 billion in 2016 to $ 11.2 billion in 2018.

Gross bookings from Uber 's core business – which accounts for the majority of sales – increased from $ 18.8 billion in 2016 to $ 41.5 billion last year.

In his rankings, Uber says he expects people to give up the expenses of owning a car to use services.

Uber is also investing in bicycles and electric scooters, where it hopes to attract customers on shorter trips.

But investors want to see a plan.

Mr. Stuart said, "I believe [investors] raised the bar and said, "We will not look at clicks or eyes of users or users unless you can show us where this profitability is." "

What do the Uber IPOs reveal?

Dan Ives, general manager and equity badyst, Wedbush Securities, said the filing of its initial public offering is the first time people will be able to "really get under the blanket of money." Uber to understand the financial data ".

But there are some areas of concern.

The company's US and Canadian operations do not seem to have recovered from the #DeleteUber campaign in 2017 – this is not a bright year for the company – which was motivated by accusations that Uber would have tried to break the taxis strike in New York.

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The hashtag then re-appeared on social media when Susan Fowler, a former engineer at Uber, wrote a blog in which she alleged a toxic work environment for the company.

Uber said: "Our position in the carpooling category has generally decreased in 2018 in the vast majority of the regions in which we operate, which are in part subject to the heavy subsidies and rebates granted by our competitors in various markets."

The employment status of Uber drivers is another potential concern. They are clbadified as independent contractors, but Uber is still facing legal problems about it. If workers were considered employees, they could face higher costs.

What now for Uber?

Uber has not specified the price at which he will sell his shares – this is to be determined in the coming weeks, when Mr Khosrowshahi will meet with potential investors.

"Many tech investors are looking for the future FAANG," said Ives, referring to the acronym for Facebook, Amazon, Apple, Netflix and Alphabet, parent company of Google.

But Ms. Smith said: "Given the fact that we have seen Lyft and its very poor deals, we found that investors may be a little more attentive about Uber."