THE LEX COLUMN: IPO prospectus reveals Uber’s profitability risks
Ride-hailing company would need to price in lavish growth for its $100bn valuation target
“That famous Uber hustle”, as boss Dara Khosrowshahi describes the ride-hailing company’s unruly ambition, is on show throughout its initial public offering prospectus. In spite of heavy losses and flatter growth, Uber is hoping to become one of the world’s most highly valued public companies. Do not believe the hype that a potential $100bn valuation is conservative because it is lower than previous targets. The technology industry may have conditioned markets not to expect profitability and positive cash flow when companies list, but at $100bn Uber would be pricing in lavish growth. The valuation is a punchy nine times trailing revenue and more than five times the company’s valuation five years ago. If Uber’s total addressable market for car rides, food delivery and freight is over $12-trillion, as it claims, then this is more than justified. But that figure includes such unlikely targets as the entire consumer spend at restaurants. Surely even Uber does not think it can put an en...