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Here’s What to Expect When Uber Goes Public

By Matthew Frankel, CFP® – Updated Apr 26, 2019 at 1:13PM

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Details from 2019’s most anticipated IPO show a valuation as high as $91.5 billion and a company with $1 billion in Q1 losses.

2019 is shaping up to be a year filled with high-profile tech IPOs, but none is nearly as anticipated as ridesharing and tech giant Uber's initial public offering.

On Thursday we learned some key details about the upcoming public offering. We also got some speculation about when the stock might actually start trading. And if you want to know how to get in on the IPO yourself, keep reading.

Man driving a car.

Image source: Getty Images.

Uber's IPO by the numbers

In its latest Securities and Exchange Commission filing, Uber announced a price range for its upcoming IPO of $44 to $50 a share. At the high end of the range, this translates to a market cap of $83.8 billion. At the low end, the company would be valued at $73.7 billion. On a fully diluted basis, the top end of the range would give the company a $91.5 billion valuation. Either way, this is considerably less than analysts had expected. Some had projected Uber would go public at a valuation of as much as $120 billion.

In its IPO, Uber plans to sell 180 million shares, which would raise $9 billion in cash for the company at the high end of its range.

To be clear, this is just the IPO price. Once shares begin trading on the open market, it's entirely possible that strong demand could push Uber's valuation above $100 billion. On the other hand, it's also possible that market forces could cause Uber's valuation to drop after the IPO. After all, that's what happened with fellow ridesharing service Lyft (LYFT -2.88%), which recently went public at $72 per share and trades for just over $56 as I write this.

LYFT Chart

LYFT data by YCharts.

In its filing, Uber also reported its first-quarter results, which showed revenue of approximately $3 billion and a net loss of $1 billion. So despite its massive global presence and high valuation, Uber isn't exactly a moneymaking business just yet.

Finally, PayPal (PYPL -1.39%) has announced that it will buy $500 million worth of Uber shares at whatever its IPO price is, in a private-placement transaction.

When will shares be available to buy?

Uber began its IPO road show Friday, which will lead up to the actual IPO. The company's exact IPO date isn't official yet, but The Wall Street Journal reports that Uber expects the IPO to price on May 9 and to begin trading on May 10, on the NYSE under the ticker symbol UBER.

Can you buy Uber shares at the IPO price?

It depends. First of all, it's important to emphasize that the $44 to $50 range is just an anticipated price range. The actual IPO price will be decided the day before the public offering takes place, and could be anywhere inside -- or outside -- the range, depending on investor demand.

Without getting too deep into a discussion of how IPO investing works, the basic idea is that in order to participate, your brokerage needs to be participating and also needs to have approved you for IPO investing.

If both of those criteria are met, you can agree to invest a certain amount of money at a maximum per-share IPO price. If the offering prices at or below your maximum price, you'll buy shares. However, if demand exceeds supply, you could receive a smaller dollar amount of shares than you initially agreed to buy.

If you don't get in on the actual IPO, you can expect shares to become available on the public market sometime during the day after the IPO pricing is revealed. However, once this happens, shares won't necessarily be at the IPO price -- supply and demand will set the price you pay, and it could be significantly higher or lower. Plus, IPOs are often very volatile in their first hours and days as publicly traded stocks, so expect quite a roller-coaster ride at first.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends PayPal Holdings. The Motley Fool has a disclosure policy.

Stocks Mentioned

PayPal Stock Quote
$73.62 (-1.39%) $-1.04
Lyft Stock Quote
$10.78 (-2.88%) $0.32

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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