Uber: the biggest IPO of 2019?
Release date is yet to be determined, but the filtering of information through the stock market is causing all the excitement and criticism.
What do the markets think?
Current estimates suggest that Uber Inc. could achieve a valuation in excess of $US100b. If this figure materializes, it would make the IPO the largest of 2019 – and one of the largest of all time. Such an outcome, according to documents provided by Uber to holders of its convertible notes, might translate into a share price between $US48 and $US55 per share.
Such extraordinary estimates, of course, have not come without critics in the market. Uber, after all, has not achieved a full year net-profit since its conception 10 years ago. Furthermore, some suggest Uber Inc may be inhibited by the recent launch of key-competitor Lyft, Inc., with that firm’s share price tumbling over 15 per cent in the weeks following its own IPO.
What’s the company saying?
Uber Inc.’s senior management shrugged of the Lyft Inc. comparisons, suggesting there is enough room in the market for both companies; and that Uber Inc. is more than just a ride-sharing company: it’s also a potential transport and logistics firm, too. Hence, despite the perceived competition in ride-sharing space, and the company’s failure to ever turn a real profit, Uber Inc. will be targeting a valuation between $US90b-$US100b, based on the firm’s self-perceived growth potential.
How can IG clients trade the IPO?
Ahead of the IPO, IG is launching a grey market in Uber Inc. shares to allow traders to speculate on what the company’s market capitalisation will be at the end of its first trading day. For example: if a trader thinks that the estimated share price of Uber is under-or-over-valued, the grey market enables them to take advantage of this difference before the company’s physical shares are released on the stock exchange and becomes a normally traded share.
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