Uber will raise $8 billion and price its IPO at $45 per share, said a person with knowledge of the matter, meaning it is valued at $76 billion, excluding unvested RSUs. This valuation is a big drop from prior expectations of up to $120 billion last fall and up to $94 billion a month ago. What changed? Uber showed surprisingly slow growth and had one of its worst results ever in the first quarter. Plus, Lyft’s shares have traded below their IPO price and the stock market fell in recent days amid trade concerns.
Uber’s enterprise value thus will be closer to $68 billion, excluding the new cash, meaning it is almost unchanged from three years ago. For those keeping score, Uber essentially will give itself an enterprise valuation multiple of 6.9 times last year’s revenue, nearly the same multiple enjoyed by Lyft’s shares on that same basis.
The IPO price means thousands of Uber employees who in the past three years received restricted stock valued at $48.77 apiece may not benefit from the IPO as much as they expected, at least initially. And many investors like the Saudi sovereign wealth fund who paid for shares at that price three years ago are underwater at the moment. SoftBank, which last year paid a discounted price of $33 per share for its 16% stake in the company, will still do fine, barring a big price dip in the next six months. Given the way Lyft shares traded down shortly after the first trades happened, one would expect Morgan Stanley to price this stock to pop, at least marginally.
This post has been updated to correct Lyft’s EV-to-revenue multiple.