In an Associated Press article, Navigant Research discusses how Uber’s profits and growth potential affect its IPO value
Last week the world’s lead ride-hailing service, Uber, priced its initial public offering at $45 per share. The company’s decision to go public has been hotly debated and fell short of reaching the $120 billion market value it was priced at earlier this year.
According to the Associated Press, Uber has changed the way people get around while also transforming the gig economy. However, several factors likely caused its lower than expected IPO including, an inability to turn a profit, rival Lyft’s price drops after it went public in April, uncertainty about the U.S. trade war with China, and a negative company image stemming from several internal issues.
"For the market to give you the value, you've either got to have a lot of profits or potential for huge growth," said Sam Abuelsamid, principal research analyst at Navigant Research.
Issues aside, Uber was still the largest IPO since Alibaba Group in 2014, and the company is continuing to grow, with revenues increasing 42% to $11.3 billion and cars completing 5.2 billion trips last year.
With a new CEO in charge, Uber aims to win over Wall Street and become the go-to app for all things transportation in coming years.
For more information, read the full article and related coverage featuring Abuelsamid's insights.