WSJ : Uber Discusses Investment at $12 Billion Valuation

Uber Discusses Investment at $12 Billion Valuation Drivers-for-Hire App Firm Seeking $500 Million Investment

Uber Inc. is hailing a group of fund managers for a large investment that could value the startup at north of $12 billion, according to people familiar with the matter.

The five-year-old company, whose mobile app connects people with drivers for hire, is talking this week to several firms to raise near or above $500 million in funding, these people said. Possible investors include mutual fund BlackRock Inc., BLK +0.22% private-equity firms General Atlantic and Technology Crossover Ventures, and hedge funds, the people said.

Prospective investors are expected to formally express their interest by the end of this week. The company is aiming to close a deal in the next few weeks or by the end of the second quarter, at the latest, these people said. The people also cautioned a deal isn't assured.

Bloomberg earlier reported that Uber is seeking to raise financing at more than $10 billion.

Uber is already one of the world's most valuable venture-backed startups. But a valuation of more than $12 billion would put it in an elite club.

Three tech startups—home-rental site Airbnb Inc., file-storage service Dropbox Inc., and Chinese handset maker Xiaomi Inc.—were each valued at $10 billion by investors in the past year. The funding round could also value Uber higher than two of the largest publicly traded car-rental companies. Hertz Global Holdings Inc. HTZ +1.33% has a market value of about $12.8 billion and Avis Budget Group Inc. CAR +0.87% is valued at $5.8 billion.

Unlike those companies, which manage expensive fleets of vehicles and hundreds of rental offices, Uber simply maintains a network of riders and drivers, much like OpenTable Inc. OPEN -0.08% operates a reservation system for diners and restaurants.

According to people briefed on Uber's financials, the company is projected to make as much as $1.5 billion in net revenue in 2015.

>>> US Close Dow+0,06% S&P+0,25% Nasdaq+0,51%

Closing Market Summary: Russell 2000 Jumps While Blue Chips Lag

The major averages registered their second consecutive advance on Thursday with the Russell 2000 ending in the lead. The small cap index advanced 1.0%, while the S&P 500 gained 0.2% with eight sectors finishing in the green. For its part, the Dow Jones Industrial Average (+0.1%) underperformed throughout the session as blue chip listings struggled to stay out of negative territory.

The Russell 2000 displayed some volatility this week, but thanks to today's advance, the index will enter the Friday session with a weekly gain of 1.1%. Furthermore, the index will begin tomorrow's affair within five points of its 200-day moving average (1118), which has been presenting a challenge in recent days.

Today, the index rallied out of the gate, which served as an encouraging early signal. The S&P 500, meanwhile, dipped below its flat line at the open, but once that dip was bought, the benchmark index rallied into the afternoon.

Overall, countercyclical sectors fared a bit better than their growth-sensitive peers. Of the four defensively-oriented groups, the consumer staples space (-0.2%) was the lone laggard, while health care (+0.5%), telecom services (+0.5%), and utilities (+0.8%) outperformed.

Notably, the health care sector was boosted by biotechnology, which in turn rallied in sympathy with small cap stocks. The iShares Nasdaq Biotechnology ETF (IBB 234.15, +4.41) jumped 1.9% to regain its 50-day moving average after falling below that level in late March.

Biotechnology also factored into the outperformance of the Nasdaq Composite (+0.6%), while the traditional tech sector (+0.1%) could not keep pace as top-weighted components displayed relative weakness. The sector slumped from its high during the final 30 minutes of action after Hewlett-Packard's (HPQ 31.78, -0.74) earnings, which were scheduled for an after-hours release, leaked. Shares of HPQ tumbled 2.3% in reaction to a top-line miss on in-line earnings.

Outside of technology, the remaining cyclical groups finished in mixed fashion as consumer discretionary (+0.5%) and financials (+0.4%) outperformed, while energy (-0.2%), industrials (+0.2%), and materials (+0.2%) lagged.

Treasuries settled near their lows after retreating throughout the session. The 10-yr note shed six ticks with its yield climbing two basis points to 2.55%.

Participation has been lacking throughout the week with the Memorial Day weekend on the horizon. Prior to today, Monday's volume (573 million) represented the second-lowest total of the year, but today's session claimed that ‘honor' as 565 million shares changed hands at the NYSE.

Economic data featured weekly initial claims, the Existing Home Sales report for April, and April Leading Indicators:

* Weekly initial claims increased from 298,000 to 326,000, while the consensus expected a reading of 305,000. In all likelihood, last week's sharp drop was an aberration rather than a change in labor market conditions, considering levels quickly returned into the 320,000-330,000 range.  * Existing home sales increased a modest 1.3% to 4.65 million SAAR in April from 4.59 million SAAR in March. The gain ended three consecutive months of sales declines. The consensus expected existing home sales to increase to 4.66 million. The increase in sales coincided with improvements in mortgage applications and a gain in the pending home sales index. Still, sales are down 6.8% from April 2013. Sales fell 1% in the Midwest and were flat in the Northeast. Gains of 4.9% and 1.0% were seen out West and in the South.  * The Leading Indicators report for April increased 0.4%. That followed a revised 1.0% increase in March, and was below the Briefing.com consensus estimate, which called for an increase of 0.5%. 

Tomorrow, the New Home Sales report for April will be released at 10:00 ET.

* S&P 500 +2.4% YTD  * Dow Jones Industrial Average -0.2% YTD  * Nasdaq Composite -0.5% YTD  * Russell 2000 -4.0% YTD

>>> US Gapping down

Gapping down

In reaction to disappointing earnings/guidance: WUBA -7.7%, MOV -4%, MOV-4%, BBY -3.9%, SINA -3.8%, SHLD -3.7%, SNPS -3.2%, BONT -2.7%, ANW -2.4%,PDCO -2.4%, MNRO -1.2%.

M&A news: ZLC -2% (reiterates commitment to $21.00 per share purchase price for Zale and encourages Zale stockholders to vote in favor of the transaction), AZN-1.1% (cont volatility due to M&A spec), UL -0.7% (agrees to Sell Ragu and Bertolli Pasta Sauce brands to Mizkan Group for $2.15 bln).

Select names showing weakness due to public offerings: TRNO -4.1% (announces public follow-on offering of 6,500,000 shares of common stock),CDW -3.4% (files for 15 mln common stock shelf offering by selling stockholders),RLJ -2.8% (announces 7.5 mln public offering of common shares), MNR -2.6% (prices 7 mln shares of common stock at $8.50 per share).

Other news: ATVI -1.1% (Activision Blizzard announces sale of common stock by Vivendi )

Analyst comments: SODA -2.8% (downgraded to Underweight from Equal Weight at Barclays), AEO -2.4% (downgraded to Sell from Neutral at Citigroup), NX -1.8% (downgraded to Neutral from Outperform at Wedbush), STM -1.5% (downgraded to Underweight from Neutral at HSBC Securities), GRFS -1.3% (initiated with a Sell at Societe Generale), GMCR -0.8% (downgraded to Neutral from Buy at ROTH Capital), MOS -0.6% (downgraded to Neutral from Outperform at Macquarie).

>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: PERY +14.9%, PERY +14.9%, PLCE+9.9%, EGHT +7.4%, SMTC +6.5%, WSM +5.5%, RENN +5%, DLTR +5%, KIRK+5%, AKBA +2.8%, SMRT +1.5%, LB +1%, NTAP +0.9%.

Select India related names showing strength: SSLT +2.5%, SIFY +2.3%, IBN+0.5%.

Select metals/mining stocks trading higher: SLV +1.7%, RIO +1.3%, GOLD+1.1%, BHP +1%, GLD +0.8%.

Select solar related names showing strength: YGE +3.5%, SOL +3.1%, JKS+1.8%, CSIQ +0.8%.

Other news: ROYL +20.3% (large drillable target identified on Alaskan 3D seismic),SN +9.1% (doubles proved reserves and production with $639 mln acquisition of 106k contiguous net acres in the Eagle Ford trend of South Texas; immediately accretive to earnings and cash flow per share ), NIHD +8.8% (cont strength), ZLCS+8.6% (reports successful results from a phase 1 clinical study to evaluate multiple modified-release formulations of Z944), DNDN +6% (cont strength), LOV +5.8% (co issues open letter; cautions stockholders not to be misled by Osmium's inaccurate statements and deceptive practices), ISIS +4.7% (reports positive phase 2 data for ISIS-FXI Rx in the prevention of venous thrombosis in patients undergoing total knee replacement surgery), GOGO +3.2% (still checking), LINE +3.2% (co and LinnCo (LNCO) announced agreement to trade a portion of its Permian Basin properties to Exxon Mobil (XOM) and its wholly owned subsidiary XTO Energy for operating interests in the Hugoton Basin) IDCC +2.5% (China's NDRC accepts co's commitments and suspends Its investigation), SNE +2.3% (Japan mkts +2% overnight; co does not plan to sell TV business, CEO says, according to reports),HES +1.9% (proceeds from sale of its retail business to Marathon Petroleum (MPC) will be used for additional share repurchases), POST +1.7% (increases offering by 1 mln shares and prices 5.5 mln shares of common stock at $47.70 per share), VRTX+1.3% (may be attributed to positive Adam Feuerstein mention), GBX +0.9% (announces alliance with Mitsubishi UFJ Lease & Finance (MTU); MUL plans to acquire ~ $1 billion in leased railcars over multi-year period).

Analyst comments: CTIC +4.3% (initiated with a Buy at Ladenburg Thalmann),HCLP +2.1% (initiated with a Outperform at Cowen), NBR +1.3% (upgraded to Buy from Hold at Jefferies), RDY +1.3% (upgraded to Overweight from Equal Weight at Barclays), FB +0.9% (upgraded to Overweight from Equal Weight at Evercore), BA+0.7% (upgraded to Buy from Hold at Drexel Hamilton )