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Uber IPO: Trade on Uber shares

Uber launched its initial public offering (IPO) on 10 May. Find out more about the company, its valuation and how you can spread bet or trade CFDs on Uber shares with CMC Markets.

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Why trade on Uber shares with CMC Markets?

Speculate on Uber

Back your view of Uber and trade on price movements via spread bets or CFDs

Trade on margin

Take a position on Uber shares without tying up all of your capital*

Competitive costs

Trade on global shares with spreads from 0.10%, or 2 cents for US and Canada shares

10 May

Uber launched its IPO
$82.4bn

Uber's IPO valuation
$45

IPO price per share

About Uber

Uber is a transportation network company, best known for its on-demand ride-hailing service, where passengers use the Uber mobile app to request rides from nearby drivers. Via the app, a passenger enters their destination and is given a price for their trip – if they accept they will be connected to a nearby driver. 

The company was founded as UberCab in 2009 by Garrett Camp, and Uber’s official services and mobile app were launched in 2011 in San Francisco. The company changed its name to Uber that same year. Over the years, the company has expanded into several other services, including food delivery, shipping and a bicycle-sharing system. It is now estimated to have over 90 million users worldwide.

Read our market analyst's thoughts on Uber's IPO >

How has Uber performed pre IPO?

Uber’s full-year revenue grew 43% year over year to $11.3bn in 2018, according to the company’s self-reported financials. Gross bookings for the year (what the company makes before it pays its drivers) were up to $50bn, an increase of 47% on 2017.

The company itself is emphasising growth over profit, and has invested heavily in other areas including food delivery, logistics, electric bikes and self-driving cars, rather than focusing solely on its ride-hailing services. Uber has reportedly set aside a $1bn budget for further projects this year. In the lead up to its IPO it has promoted itself as a transportation and logistics service, rather than purely as a ride-hailing company. 

However, fourth-quarter sales for 2018 didn’t grow as fast as they have done in the past, despite Uber’s many investments. $3bn of the net revenue the company gathered in 2018 (out of $11.3bn in total) was from the last three months of the year. Compared to the previous quarter, this is only up 2%.

While the company has dominated the market since its conception, it has also struggled with public controversies and setbacks. For example, the collision of one of its driverless cars; deceiving regulators; criticism for its company culture; and accusations of spying on its closest competitor, Lyft.

But the biggest challenge for Uber is likely to be its losses, which totalled $1.8bn (adjusted EBITDA loss) for 2018. Losses have slowed (by 15%) compared to 2017, when they were at $2.2bn, but the company will need to prove that it can control costs and make money.

Uber's IPO performance

Uber priced its stock at $45 per share for a valuation of $82.4bn on Thursday. It had an expected valuation of between $80bn and $90bn. It began trading on the New York Stock Exchange on Friday morning at $42 per share, which was below its IPO price, and closed the day at $41.57, a drop of 7.6% from its IPO price.

It's possible that the sedate performance of rival Lyft's shares had an impact on appetite for the stock. Lyft began trading publicly in March, and at the time of Uber's IPO had lost 27% of its IPO price.

Nonetheless, Uber's IPO was still successful enough to raise $8.1bn, which the company has said will be used to fund expansion into new markets and the development of further projects. 

Uber vs Lyft

While both Uber and Lyft offer an app-based, ride-hailing service, there are also many differences between the two companies. Lyft was the first of the companies to IPO – it began trading on the Nasdaq on 29 March 2019 with an opening stock price of $87.24. It was valued at more than $24bn when it went public, whereas Uber had a much larger expected valuation of between $80bn and $90bn. Uber is also the larger of the two, operating in over 70 countries, whereas Lyft operates solely in the US and Canada. 

Uber CEO, Dara Khosrowshahi, has stated he is not concerned by Lyft’s IPO, believing that there is enough public demand for both companies. This is perhaps reflected in the companies’ business models. While Lyft is focused solely on the thriving US ride-sharing market, Uber is invested in other areas including delivery (Uber Eats) and shipping (Uber Freight).


UberLyft
Revenue (2018)$11.3bn$2.2bn
Losses (2018)$1.8bn$911m
Total cities operating700+ (globally)300+ (US and Canada)
Number of users (2018)91 million30.7 million
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What is an IPO?

An IPO, or initial public offering, occurs when a company sells its stock to the public for the first time. Before an IPO, a company is classed as private and normally has a small number of shareholders and professional investors (such as venture capitalists or angel investors).

Once a company goes public, a portion of its shares are made available to the public to be traded on a stock exchange as an IPO investment. Any individual or institution that has an interest in the company then has the opportunity to invest in it. There is normally a lot of trading activity around the time the shares go up for sale, which can create volatility and potential trading opportunities. Please note, increased volatility can also increase risk for investors and traders.

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