Uber sets IPO in motion, seeks to ‘ignite opportunity’

In this June 21, 2017, file photo a man walks into the building that houses the headquarters of Uber in San Francisco. Documents released on April 11, 2019, offered the most detailed view of the world's largest ride-hailing service since its inception a decade ago. (AP Photo/Eric Risberg, File)
Updated 12 April 2019
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Uber sets IPO in motion, seeks to ‘ignite opportunity’

  • Uber said it operates on six continents with some 14 million trips per day
  • Uber is the largest of the “unicorns” or venture backed firms worth at least $1 billion to list on Wall Street

SAN FRANCISCO, US: Uber filed documents Thursday for its much-anticipated public share offering expected to be the largest in the tech sector in years, and a bellwether for other venture-backed startups eyeing Wall Street listing.
The filing with the Securities and Exchange Commission contained no specific pricing or timing for the market debut for Uber, which according to media reports was expected to raise some $10 billion.
Uber’s valuation in its latest private investment round was more than $70 billion, but reports said the ride-hailing giant was likely to seek a market value of close to $100 billion.
The filing noted that Uber offers ridesharing in some 700 cities but has bolder ambitions to reshape how people and goods are transported with operations such as meal deliveries, freight, and electric bikes and scooters.
“Our mission is to ignite opportunity by setting the world in motion,” the document filed with the Securities and Exchange Commission.
“We revolutionized personal mobility with ridesharing, and we are leveraging our platform to redefine the massive meal delivery and logistics industries. While we have had unparalleled growth at scale, we are just getting started.”
Uber said it operates on six continents with some 14 million trips per day and has totaled more than 10 billion rides since it was founded in 2010.
The filing contained a “placeholder” amount of $1 billion to be raised but that figure is expected to increase ahead of the initial public offering (IPO) expected in May.
The move comes after a lackluster market debut for Uber’s US rival Lyft, which has lost more than 10 percent of its value since its IPO last month.
Chief executive Dara Khosrowshahi, who took over in 2017 as part of an effort to reform a corporate culture marred by misconduct and other scandals, said Uber has taken steps to restore its brand and credibility.
“Taking this step means that we have even greater responsibilities — to our shareholders our customers and our colleagues,” Khosrowshahi said in a letter announcing the IPO.
Uber and Lyft both are predicting that ride-hailing will gain even more traction with autonomous vehicles, allowing more people to give up private cars and freeing up more urban space.
“We believe that autonomous vehicle technologies will enable a product that competes with the cost of personal vehicle ownership and usage, and represents the future of transportation,” Uber’s filing said.

Largest of 'unicorns'
Uber is the largest of the “unicorns” or venture backed firms worth at least $1 billion to list on Wall Street, and is one of the key companies in the “sharing economy” which is based on offering services to replace ownership of cars, homes and other commodities.
Analysts have warned that Uber and Lyft face a difficult road to profitability amid challenges from regulators and established taxi operators around the world. Some question the business model of using independent contractors as drivers — a system which the companies say is more flexible and leads to entrepreneurial spirit.
Uber’s revenue grew 42 percent last year to $11.2 billion but it continued to lose money from its operations. A net profit was reported for the year from a large asset sale, but operational losses were more than $3 billion.
“Investors should be ready for a lot of volatility” in Uber, said Scott Rostan, a former investment banker who is currently an adjunct professor at the University of North Carolina.
“In my opinion if you are buying into Uber or Lyft you’re buying into a belief this is going to revolutionize transportation in the future. But a good business doesn’t necessarily mean a good investment.”
Rostan added that both firms will be seeking to step up growth and that “i it turns into a market share fight between Uber and Lyft, profitability is going to be tough.”
Daniel Ives of Wedbush Securities noted that the ride-hailing firms will face competition from other autonomous driving firms including the former Google car unit Waymo.
“Lyft’s IPO was supposed to be a watershed moment for the highly anticipated 2019 tech IPO class,” Ives said in a research note.
“With Uber, investors will soon have a second option to make a bet on the future of mobility and transportation with the clear market share leader, while competitor focus will likely also zero in on Waymo/Google.”


Debut of China’s Nasdaq-style board adds $44bn in market cap

Updated 22 July 2019
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Debut of China’s Nasdaq-style board adds $44bn in market cap

  • Activity draws attention away from main board

BEIJING: Trading on China’s new Nasdaq-style board for homegrown tech firms hit fever pitch on Monday, with shares up as much as 520 percent in a wild debut that more than doubled the exchange’s combined market capitalization and beat veteran investors’ expectations.

Sixteen of the first batch of 25 companies — ranging from chip-makers to health care firms — increased their already frothy initial public offering (IPO) prices by 136 percent on the STAR Market, operated by the Shanghai Stock Exchange.

The raucous first day of trade tripped the exchange’s circuit breakers that are designed to calm frenzied activity. The weakest performer leapt 84.22 percent. In total, the day saw the creation of around 305 billion yuan ($44.3 billion) in new market capitalization on top of an initial market cap of around 225 billion yuan, according to Reuters’ calculations.

“The price gains are crazier than we expected,” said Stephen Huang, vice president of Shanghai See Truth Investment Management. “These are good companies, but valuations are too high. Buying them now makes no sense.”

Modelled after Nasdaq, and complete with a US-style IPO system, STAR may be China’s boldest attempt at capital market reforms yet. It is also seen driven by Beijing’s ambition to become technologically self-reliant as a prolonged trade war with Washington catches Chinese tech firms in the crossfire.

Trading in Anji Microelectronics Technology (Shanghai) Co. Ltd., a semiconductor firm, was briefly halted twice as the company’s shares hit two circuit breakers — first after rising 30 percent, then after climbing 60 percent from the market open.

HIGHLIGHTS

• 16 of 25 STAR Market firms more than double from IPO price.

• Weakest performer gains 84 percent, average gain of 140 percent.

• STAR may be China’s boldest attempt at capital market reforms yet.

The mechanisms did little to keep Anji shares in check as they soared as much as 520 percent from their IPO price in the morning session. Anji shares ended the day up 400.2 percent from their IPO price, the day’s biggest gain, giving the company a valuation of nearly 242 times 2018 earnings.

Suzhou Harmontronics Automation Technology Co. Ltd., in contrast, triggered its circuit breaker in the opposite direction, falling 30 percent from the market open in early trade before rebounding. But by the market close, the company’s shares were still 94.61 percent higher than their IPO price.

Wild share price swings, partly the result of loose trading rules, had been widely expected. IPOs had been oversubscribed by an average of about 1,700 times among retail investors.

The STAR Market sets no limits on share prices during the first five days of a company’s trading. That compares with a cap of 44 percent on debut on other boards in China.

In subsequent trading sessions, stocks on the new tech board will be allowed to rise or fall a maximum 20 percent in a day, double the 10 percent daily limit on other boards.

Regulators last week cautioned individual investors against “blindly” buying STAR Market stocks, but said big fluctuations were normal.

Looser trading rules were aimed at “giving market players adequate freedom in the game, accelerating the formation of equilibrium prices, and boosting price-setting efficiency,” the Shanghai Stock Exchange (SSE) said in a statement on Friday.

The SSE added that it was normal to see big swings in newly listed tech shares, as such companies typically have uncertain prospects, and are difficult to evaluate.