Ahead of IPO, Uber signals there’s more to it than ride-hailing

This was a big week in IPO news for both Uber Technologies Inc. and Lyft Inc., as each edges toward its eagerly awaited public market debut. So far, there have been some striking similarities between the companies’ stories (e.g. the timing and the lack of profits), but there are key differences too. As it preps for the big event, Lyft has been stressing its gains in ride-hailing. Uber, meanwhile, is trumpeting just about everything else.

There have been several signals of Uber’s and Lyft’s IPO seriousness in the last several days, as the companies’ banking alliances have started to solidify. Morgan Stanley and Goldman Sachs Group Inc. are wooing Uber, telling the company that it could be worth $120 billion on the public markets. One of those two firms will surely lead Uber’s IPO—though which one is anyone’s guess.

Morgan Stanley’s Michael Grimes, perhaps Silicon Valley’s most powerful banker, has reportedly been driving for Uber as part of his campaign to win the company’s business. And Morgan Stanley led Uber’s latest debt deal. On the other hand, Uber’s top ranks have long been dominated by former Goldman Sachs executives.

Lyft, meanwhile, picked JPMorgan Chase & Co. to lead its public offering, with Credit Suisse Group AG and Jefferies Financial Group Inc. assisting. Lyft’s bankers are targeting a $25 billion valuation on the public markets, up from $15.1 billion in its most recent private financing round.

We also learned a lot about IPO timing this week—and a little bit about how much to trust Uber Chief Executive Officer Dara Khosrowshahi’s public statements. Khosrowshahi has said over and over again that Uber is targeting a public offering in the second half of 2019. But sources now say that he has started telling investors and bankers privately that the company wants to go public in the first half of the year.

There’s a bit of gamesmanship at play here, which can partially explain the misdirection. Rival Lyft has been planning an offering in March or April. Now, the two companies will have to jostle for position or end up listing right on top of each other. That matters not just because the companies will divide investors’ attention, but because both companies are watching the markets, worried that the current bull run may not last much longer.

We’ve also recently been getting a taste of how each company will cast its IPO story. While Lyft will focus on its market share gains in ride-hailing, Uber will emphasize the breadth of its business. Expect to hear more about not just picking up passengers, but the company’s large stakes in Didi Chuxing, Grab and Yandex. That’s on top of its autonomous vehicle program, its trucking businesses and its food delivery segment that bankers believe is worth double GrubHub’s current $10.6 billion market cap. And I almost forgot about electric bikes and scooters!

It’s become clear that Uber is going to be pushing a growth story wherever it can find one. For example, on Wednesday the company announced Powerloop, a program where Uber will rent out interchangeable trailers so that truckers don’t have to sit around waiting for their cargo to be unloaded. Instead, truck drivers can just unhook one Powerloop trailer and replace it with another one and be on their way.

And then there’s an experimental program called Uber Works. The company is trying to build a flexible temporary staffing workforce to help other companies get things done, according to people familiar with the program but who asked not to be identified because the details are private. The program was reported first reported on Thursday by the Financial Times.

Why bother crowing about side hustles? It’s hard to tell whether Uber is trying to distract us from its ride-hailing business, or if it’s just earnestly a company that can do a lot of tangentially related things. Ultimately, we have to hope that Uber clearly breaks out its ride-hailing business in its IPO prospectus. That could answer the key question of whether its core offering is going to generate earnings. Uber might have a lot of irons in the fire, but even Amazon has had to prove to the markets at times that it can turn a profit when it wants to. Uber doesn’t seem to be in any hurry to do that.


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