The topic of Uber’s IPO came up at lunch today. This is a shock, because, as of today, there is no Uber IPO. In fact, it will probably be a long time before there is an Uber IPO, if ever.
Why No Uber IPO Yet?
Wondering why there is no Uber IPO, and why there is still no Uber IPO planned?
The answer may surprise you.
Uber actually loses money.
A lot of money.
In fact, Uber isn’t so much a business, as a cash incinerator desperately trying to make the transition to viable proof of concept. Uber does a pretty decent job keeping this fact out of the headlines, but the truth is that Uber loses money hand over fist. If it were to file for an IPO, it would have to break out and detail its finances, and it really doesn’t want people focusing on that right now.
However, Uber did recently release some financial data, even though it isn’t required to do so. (Keep in mind that such numbers are unaudited, and not subject to any sort of SEC scrutiny). In that data, it reported gross revenue from bookings of $20 billion. That’s pretty impressive. However, after it paid out drivers, it gets to keep just $6.5 billion. And, according to Uber, that all adds up to a loss of $2.8 billion in 2016. However, that doesn’t include operations in China which Bloomberg estimates would be another billion, for a total 2016 loss of $3.8 billion.
Here is where it gets ugly.
Uber has already raised tons of money from many different investors, and all of those investors will be looking to cash out at least some of their investment in any IPO. That means that Uber would have to raise an enormous amount of cash from its IPO.
With no profits, and no real map to get to any sort of profitability, all Uber would have going for it is a flashy name. While that is sometimes enough to float a sweet IPO, it isn’t enough to keep a company in the limelight (see Twitter). And with a CEO who’s fame and fortune is tied to Uber being considered a revolutionary company on the upswing, don’t expect a filing that could shake that myth any time soon.