Banks value Uber at $120B ahead of possible IPO

Dive Brief:

Proposals from Wall Street banks have valued a potential Uber initial public offering (IPO) at $120 billion, according to a report from The Wall Street Journal. The proposals reportedly came from Goldman Sachs Group and Morgan Stanley and are meant to advise on how the banks would underwrite an IPO.
The figure is almost double the $76 billion value Uber was given during a fundraising round in August, and sets the stage for a potential blockbuster series of IPOs from startups, including competitor Lyft. Uber CEO Dara Khosrowshahi has said the the company could launch an IPO in the second half of 2019.
The Journal reports that Uber doesn’t expect to be profitable for at least three years and will generate revenue between $10 billion and $11 billion this year, according to documents it has distributed related to a potential bond offering.

Dive Insight:

Investors have been clamoring for Uber and Lyft to go public, and the whopping seven-figure valuation shows why. It reflects the interest in the growing company, which now encompasses food delivery, dockless vehicles and self-driving cars in addition to its ride-sharing roots. A $500 million investment from Toyota this summer along with an agreement to jointly work on autonomous technology has also helped boost the company’s value. Lyft has also been exploring an IPO for the end of 2019.

In an interview with the Financial Times in August, Khosrowshahi said Uber’s expansions beyond ride-sharing represented a bit to get into "a $6 trillion mobility market," adding 'no one product is going to be serving that whole market."

“The ultimate competition here is car ownership, and boy is that a big market to go after,” Khosrowshahi said.

The company has weathered several scandals of late that could hurt it on the market, including the firing of co-founder Travis Kalanick, safety concerns from customers, allegations of sexual harassment at the company and the fatal collision of a test self-driving vehicle with a pedestrian in Arizona. Bloomberg also notes that recent tech valuations have not borne out when investors actually buy shares. Snap Inc., the photo-sharing app, and Chinese smartphone manufacturer Xiaomi Corp. both had their value cut in half from the IPO.