Lyft's stock pain an ominous sign for Uber IPO

Lyft's stock pain an ominous sign for Uber IPO

Lyft's stock pain an ominous sign for Uber IPO

The S-1 filing underscores Uber's rapid growth in the last three years but also how a string of public scandals and increased competition from rivals have weighed on its plans to attract and retain riders.

The ridesharing company will seek to sell roughly $10 billion in stock, according to a Reuters report, which also confirmed the expected timing of the IPO registration.

The filing with the U.S. Securities and Exchange Commission revealed Uber had 91 million average monthly active users on its platforms, including for ride-hailing and Uber Eats, at the end of 2018.

The unveiling comes four months after Uber took its first step toward its initial public offering with a confidential filing.

Shares of recently listed Lyft Inc fell to a fresh low and closed the day down nearly 11 percent on Wednesday on news that rival Uber Technologies Inc was close to filing its own initial public offering. Its IPO could come as soon as early May.

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Uber has 65 percent share in North America while Lyft says it has 39 percent in the United States.

Image sharing app Pinterest Inc this week also set the terms for its IPO which would value the company at up to $11.3 billion, below its latest fundraising round which valued it at $12 billion in 2017. The company hasn't yet disclosed the number of shares it will offer or its intended price range. It lost $3.3 billion previous year, excluding one-off gains, while Lyft lost $911 million for 2018. Uber discloses its "core platform contribution profit", a hand-selected metric meant to show the revenue of its two main businesses minus some of the driver incentives, legal costs and other stuff. That's down from a loss of $2.6 billion in 2017. Uber expected to raise about $10 billion at a valuation of $90 billion to $100 billion. Drivers will be able to use the bonuses to purchase Uber stock at its IPO price.

Among other things, Uber revealed the U.S. Justice Department is conducting a criminal investigation into a yearlong cover-up of a massive computer break-in during 2016 that heisted personal information belonging to millions of passengers and drivers.

After making the public filing, Uber will begin a series of investor presentations, called a roadshow, which Reuters has reported will start the week of April 29.

The pressure to become profitable will ratchet up once these companies become public, said Jordan Stuart, a portfolio manager for Federated Kaufmann funds who often purchases companies' stock in the IPO. However, its shares dropped by more than 7 percent after Uber's valuation news hit the market. It sound nice, but investors should ask hard questions about how much of Uber's expertise in signing up ersatz taxi drivers is useful for reaching deals with restaurants to deliver burritos, or big companies that want to ship potato chips to grocery stores.

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