Uber Set to Price IPO at Midpoint of Target Range or Below
Ride-hailing giant has set range of $44 to $50 share, or about $80 billion to $90 billion
Uber Technologies Inc. is on track to price its initial public offering at the midpoint of its target or below, according to people familiar with the matter, following a big stock-market drop and the disappointing debut of rival Lyft Inc. LYFT -6.81%
Uber is in the middle of pitching investors across the country on its shares, which are set to price Thursday ahead of a Friday trading debut. The ride-hailing giant has set a range of $44 to $50 share, or about $80 billion to $90 billion, already down from its earlier indication.
Investors are still putting in their orders for the shares and things could shift before the price is set later Thursday. There is currently enthusiasm for shares in the bottom half of the range, one person familiar with the matter said.
If the stock is priced at the $47-a-share midpoint, Uber’s valuation on a fully diluted basis would be roughly $86 billion. In the weeks before it officially set a price range, Uber had provided documentation to holders of its convertible notes setting a potential band of $48 to $55 a share, or $90 billion to $100 billion, including what it expects to raise in the offering—now about $8 billion to $10 billion. Last year, lead underwriters Morgan Stanley and Goldman Sachs Group Inc. had pitched the company on a valuation of as much as $120 billion
Uber’s offering appears to be falling victim at least in part to unfortunate timing. On Tuesday, the Dow Jones Industrial Average suffered its biggest decline in months on escalating trade-dispute fears, a selloff that hit tech stocks hardest. The Dow industrials are down roughly 1.8% this week, and investors and traders say they expect more choppiness ahead, though the market was more stable Wednesday.
The ride-hailing giant’s listing has been overshadowed in recent weeks by the woes of Lyft. Its smaller rival’s shares dropped 7% on Wednesday and were on track for their lowest close ever after the company reported first-quarter results late Tuesday. Some investors said they were waiting to put in orders for Uber’s IPO until after Lyft reported earnings.
Diminishing expectations for Uber’s IPO, the biggest in years, could put somewhat of a damper on what is expected to be one of the best years ever for new issues as many big technology startups rush to the public markets. Still, others that have made their debuts in recent weeks have performed well. Pinterest Inc.’s shares are up more than 50% from their offer price, and Zoom Video Communications Inc.’s stock is trading at more than double its initial offering level. Meanwhile, alternative-meat startup Beyond Meat Inc. has more than tripled.