Saturday 13 April 2019 12:49 pm

Uber IPO: Six things you need to know

After Uber unveiled its pitch to investors ahead of the company's initial public offering, here are six of the most significant things to know.

Revenue is plateauing

As Uber continue to prioritise growth over profits, the ride-hailing giant's revenue has plateaued.

The firm reported an adjusted loss before interest and tax of $1.9bn for 2018, 15 per cent down on the year before, but it could still pose a challenge to investors trying to figure out the company's value in public markets.

It also forecast its operating expenses “to increase significantly in the foreseeable future”. Uber's operating loss was $3bn last year, while revenue slowed at $11.3bn, according to documents filed with the US Securities and Exchange Commission.

Toxic culture remains a risk

In 2017 Uber's toxic culture resulted in a campaign that saw hundreds of thousands of people delete their accounts, an issue that is addressed in their IPO. 

It came in the wake of scandals involving alleged sexual harassment, as well as the tracking of phones and security breaches. Uber even lost its London licence temporarily due to a lack of corporate responsibility.

“Our workplace culture and forward-leaning approach created significant operational and cultural challenges that have in the past harmed, and may in the future continue to harm, our business results and financial condition,” Uber says in its filing.

Lyft's brutal IPO might hurt Uber

Ride-hailing rivals Lyft won the race to an initial public offering but the firm's share price has taken a heavy hit since going public, which may cause Uber to reevaluate their own expectations. 

Lyft priced its IPO at $72 per share last month to give the company a $24bn valuation after increasing its initial target range.

But despite a sharp increase on the first day of trading, Lyft's share price has since plunged and ended Friday's trading at just $59.90.

Uber's legal battles

The company admitted that allegations against drivers and riders of harassment, assault, rape or other forms of harmful behaviour “adversely impact our brand, reputation, and business”, even in cases that do not result in liability.

It also says that there are “a number of inquiries, investigations and requests for information” from agencies within the US, such as the department of justice, as well as other countries.

The costs of dealing with these cases mounts up, while a number of drivers have also made demands for arbitration amid a desire to be employees rather than contractors. 

In 2018, Uber set aside $1.1bn to meet penalties and settlements.

Can Uber go driverless?

Uber have fallen behind slightly in the race to create self-driving cars. The company has spent around a $1bn on creating the technology, according to the Financial Times, but progress has slowed since a fatal crash in Arizona a year ago.

"We expect certain competitors to commercialise autonomous vehicle technologies before we do,” the firm said in its filing.

Despite that, it is continuing to keep the development of driverless car technology a main priority, with the long-term project to cut its biggest cost: drivers. 

It's about much more than cars

The company is much more than just a ride-hailing hailing service, with it also made up of Uber Eats and Uber Freights, two fast-growing segments.

Uber Eats received orders from 15 million customers last year with revenue jumping 149% last year to $1.46bn and the firm sees restaurants and other delivery services just as much competitors for customers as taxi services.

Meanwhile, Uber Freight brought in $125 million in revenue in the fourth quarter and last month the company announced it would be expanding to Europe creating room for further growth.