IT’S UBER TIME: Uber Officially Prices IPO. It is far from certain the market will warmly welcome Uber shares. By Todd Horwitz, Bubba Trading.

 

Uber priced its IPO at $45 per share Thursday, at the low end of its stated range. At the IPO price of $45 per share, the company will be valued on a non-diluted basis at about $75.46 billion, which will put the stock’s market cap right around the size of Caterpillar’s and make it one of the most valuable companies ever to go public. On a fully diluted basis, Uber has an implied market valuation of $82.4 billion. Early reports suggested Uber was seeking a valuation of up to $120 billion. Its expected range was between $44 and $50 per share, according to a filing last month. 

It is far from certain the market will warmly welcome Uber shares. Lyft Inc., Uber’s closest rival, has stumbled badly since it began trading publicly in March, with the shares down more than 20% from their IPO price. Mindful of that, and an uptick in market jitters in recent days, Uber and its underwriters are taking a conservative approach to pricing the shares after two weeks of roadshow meetings with investors. There was demand for the shares at higher prices but Uber sought to put them in the hands of as many institutional investors as possible, given their penchant for being more long-term-oriented than hedge-fund and retail investors, according to people familiar with the matter.

Potential investors have also expressed concern that Uber’s existing shareholders, sitting on big paper gains after the ride-hailing pioneer’s value exploded since it was founded 10 years ago, could find ways to circumvent a lockup that bars them from selling for six months.

Before Lyft made its debut, George Soros purchased a big stake in the company from fellow billionaire Carl Icahn. A hedge Mr. Soros established before buying the stock may have contributed to selling pressure on Lyft, The Wall Street Journal reported. Indeed, Uber added as a risk factor to its IPO paperwork the possibility that its existing shareholders could engage in “sales, short sales or hedging transactions…whether or not we believe them to be prohibited.”

Uber stands out among a group of private technology companies that have raised vast sums at steep valuations: Its fundraising has eclipsed that of all the others in the U.S., amounting to nearly $20 billion in equity and debt.

Todd “Bubba” Horwitz

IN ASSOCIATION WITH

Financial Markets and Political Commentary
 

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Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.