It’s not too hard to see why Uber became a tremendous success. Peer-reviewed ride-sharing, on command on your phone, with prices up front and veicle flexibility? It’s only a wonder why no one thought of it before.
Now, almost a decade after the company was founded, Uber is taking the next big step: an initial public offering (IPO). By going public, Uber will do what it has always done: share. It will share the control and profits of the company with its investors, all while growing in its own right.
As the calendar turns to 2019, we’re just over eighteen months removed from the very public removal of the company’s founder and former CEO, Travis Kalanick. Now, under Dara Khosrowshahi, they are attempting to remove the stain of moving ever forward at the cost of “the moral compass of the company” (to borrow a phrase from the new CEO), whilst simultaneously trying to move the company forward.
Can Uber overcome its history with its IPO? If the hype is anything to judge on, the answer is a resounding yes. This IPO is expected to be one of the richest in history, with the Wall Street Journal reporting that the company’s valuation could reach as high as $120 billion.
There’s no debating that Uber is a successful company whose IPO will be a hot item. The serious concern is timing. 2019 is a year full of significant IPOs, with Pinterest, Slack, and the secretive Palantir also expected to go public. But the biggest concern for Uber is its immediate competition, Lyft, another ridesharing app with whom they are now embroiled in an IPO race.
Uber has a distinct advantage over the competition, in that, like Google, Kleenex, and Tylenol, its name is synonymous with the product it offers. Far from risking the genericide that has killed other trademarks, Uber has total name recognition. When you’re asked to call a ride-share at a party, you’re “ubering,” whether the app you click on is Uber or not.
Uber is also expanding in more creative ways than the competition, with new services like Uber Eats taking off all over the country. Lyft remains the distinctly smaller of the two companies, and will probably continue to be well after the IPO. But it may be the more aggressive company, which could give it an advantage.
Is it wise to invest in a company offering an IPO around the same time as its direct competition? In fact, it may not be a problem. Lyft and Uber are competitors in the market, but they shouldn’t be competitors in an IPO, as the companies values should be judged on their own merits. With that said, it is important to monitor who actually goes public first, as the winner of that race will get the early market on potential investors cornered.
There should be some concern about whether Uber is overpriced at a potential $120 billion value. That number has climbed significantly in the past several months, but the company has made serious improvements in its internal structure in that time. At day’s end, the IPO may be a little overpriced, but it depends on what investors expect from their shares.
The decision to invest in or not to invest in Uber may come down to your personal investment strategy. Are you a risk taker? Or are you looking for stable ventures? If you’re a risk taker, Uber is perfect for you. It has huge upside and the name recognition makes it relatively low risk, all things considered. But those who want stability may be wise to stay away in the early days of the IPO. The buys 2019 IPO schedule, the competition with Lyft, and the recent uncertainty of the economy all suggest that Uber’s value could fluctuate significantly in the early going, which may be a turnoff for those looking for solidity in their portfolio.