After years of anticipation and endless speculation about the timing, the most announced IPO of this year (IPO) is finally on track. With the release of Uber & # 39; s S-1 submission last Friday, the San Francisco-based ride-off company is expected to start trading sometime next month. It is expected to be one of the largest IPOs in recent years.
Over the past few years, Uber (NYSE 🙂 has shaken up the traditional transport market by essentially turning any interested party into a taxi driver by simply registering with the company's website and / or app. The company is popular with users, both drivers and passengers, but has really set Silicon Valley on fire, from which it has received billions for start-up and bridge financing.
According to Reuters, Uber wants to raise around $ 10 billion via the IPO. When that is the case, the company has the honor of becoming the seventh largest IPO ever in the United States. If everything goes according to plan, the ride-sharing giant is expected to be worth around $ 100 billion – a market capitalization that has never been seen for IPO's since Alibaba & # 39; s (NYSE 🙂 debut in 2014.
Key Metrics
Although Uber's S-1 filling is over 200 pages long, it contains surprisingly little information about the company's most important statistics. For its critical & # 39; users & # 39; number, Uber offers something that it calls monthly platform users or MAPC & # 39; s.
In the fourth quarter of 2018, the number of monthly users grew by 35% on an annual basis, from 68 million to 91 million. However, during the previous year, Uber's MAPC growth was more robust, an increase of 51%. Of course it is not fair to expect the 50% YoY expansion to continue; if Uber manages to keep its growth rate at or above 30% YoY, investors would be more than satisfied.
The problem with this version of their user statistics is that, since Uber is active in 63 countries, there is no indication of the percentage of US users vs.. international customers. Users in the US are more important for the profit of the company, because a ride in the US, for example, is many times more profitable than a comparable transaction in India for example.
This also applies to another important metric: trips.
In the fourth quarter of 2018, Uber customers registered nearly 1.5 billion journeys, an increase of 1.08 billion in Q4 2017, a gain of 37%. But the drill-down that Uber offers for monthly journeys by MAPC is also obscure.
After having managed for years to increase the number of trips for each individual user, it seems that Uber knows this statistic to the maximum:
Uber: monthly trips by MAPC
But here too the information is somewhat dark. Uber defines a journey in the broadest possible sense – this includes an actual Uber ride, a rental of e-scooters, even a delivery by Uber Eats, the food delivery department. Aggregating activity of all three segments of Uber into one number does not allow a complete or accurate analysis of Uber's growth potential. As can be seen below, not all segments of the company are made equal.
Segments and turnover
Uber operates in three separate segments: Ride eavesdropping – including cars, bicycles, boats and even planes; Uber eats; and others, including things like a vehicle lease program that is being taken out by the company and a freight service that they are currently testing. Combined, hailing and Uber Eats make up 95% of Uber's income.
Not surprisingly, driving a car is the largest part of the business. In 2018, it generated $ 9.1 billion or 81% of total revenue. This segment has grown by 33% since last year, when it brought in $ 6.8 billion. Uber Eats had a more spectacular 2018, growing from $ 587 million in revenue to $ 1.4 billion, or + 149%.
For 2018, Uber's total revenue was $ 11.2 billion, 42% higher than the $ 7.9 billion it brought with it in 2017. Uber experienced a significant slowdown in sales growth last year, after growing by 106% in 2017 and leaping from $ 3.8 billion to $ 7.9 billion.
Although Uber shows strong but slowing sales growth, sales growth unfortunately does not translate into sales growth. Uber loses a lot of money.
It is rhythmic competitor Lyft (NASDAQ :), which we had covered for his own IPO last month, had a loss of $ 688 and $ 911 million in 2017 and 2018. Those numbers seem minimal compared to Uber & # 39; s operational losses of $ 4 billion and $ 3 billion in 2017 and 2018.
It is of course remarkable that for Uber the ratio between net losses and income has shrunk from 51% to 26% in 2018. Nevertheless, Uber is very clear in his submission that the situation is not about to improve at any time coming soon:
"We expect that our operating costs will increase significantly in the near future and that we may not achieve profitability."
Bottom Line
Unfortunately for Uber, the recent IPO from Lyft did not go well. Lyft started trading on the NASDAQ at the end of March, opening at $ 87, but fell more than 35% of its current price of $ 56.11 from yesterday's closing. Investors do not appear to be overly optimistic about the future of ride hailing, which does not bode well for the public mention of Uber.
Yet Uber has a considerable advantage over Lyft, which is only active in two countries. Uber & # 39; s strong global presence includes major activities in Europe, Russia, Asia and the Middle East. Last month, the company purchased Careem, a rival from the Middle East, for $ 3.1 billion. Uber's delivery service was also an important growth engine in 2018, offering some revenue diversity.
Uber's turnover is also more than five times that of Lyft, for a proportionally smaller loss of the bottom line. It is therefore in better condition at this stage than Lyft.
But if Lyft is currently worth $ 17 billion and is falling, how much is Uber actually worth? Knowing what we are currently doing, $ 100 billion seems too high for a suitable access point.
Nevertheless, fast-growing companies on the stock market have always had a premium price tag. Investors, however, are always dissatisfied when growth begins to slow and losses accumulate. Uber is dangerously close to touching both elements simultaneously.
