Wall Street’s most awaited startup company, Uber is set to go public Friday, May 10th and the stakes are high because the ride-hailing company is touted to be the largest IPO after Alibaba. The ride-hailing app is set to announce its IPO through the New York Stock Exchange (NYSE) like other unicorns Spotify and Slack.
Dubbed as the most successful startup company in the world, Uber, valued at around $70 billion in the private market is said to make an approximate of $90 to $100 billion or possibly more by going public.
Months leading to Uber’s historic IPO launch, the company is seen doubling the effort to attract investors through aggressive actions across different regions to expand its business. Throughout the years, it has made deals with ride-hailing apps like Grab in Southeast Asia to focus more on areas like the Middle East, Australia, and Europe. Further, previous reports revealed Uber was planning to buy Middle East competitor, Careem.
In addition, Uber expanded its services through Uber Eats, a food delivery service, and Uber Freight, which “connects carriers with the most appropriate shipments available on our platform, and gives carriers upfront, transparent pricing and the ability to book a shipment with the touch of a button.” Uber has also touched with Mobility services that include bikes and scooters. All of which earned the company an estimated $370 million in 2018, a rise from 2017’s $67 million.
As of the moment, the startup unicorn is eyeing around 1.7 billion shares outstanding after the IPO, excluding items including options, restricted stock units, and warrants.
However, with every effort Uber has been trying to make to improve its rapport among possible investors, they still seem to fall short on other matters especially among their drivers. In contemporary ride-hailing companies, drivers are the very core of their service.
Apparently, Uber and Lyft employ their drivers contractually. This means that these companies are not legally bound to support their drivers’ health care, overtime fees, and other benefits that come with being a regular employee. In this sense, companies save more money from paying for said benefits at the driver’s expense.
At this rate, driver dissatisfaction is bound to increase along with reports that the company is planning to decrease wages and incentives offered to its drivers. For ride-hailing companies, increasing driver dissatisfaction equates to an increase of drivers leaving the company’s workforce, which again is at the very core of what these companies stand for.
Recently, the New York Taxi Workers Association is calling on its US-based drivers to work with solidarity with drivers from London and log off from both Uber and Lyft on May 8 between 7 AM and 9 AM.
“In the IPO filing, Uber said drivers will only get more dissatisfied because they plan to cut our pay and stop incentives,” NYTWA member Sonam Lama said in a press release. “We don’t want our wages to stay just minimum. We want Uber to answer to us, not to investors. The gig economy is all about exploiting workers by taking away our rights. It has to stop. Uber is the worst actor in the gig economy.”
On top of that, Uber is currently facing a class action lawsuit from its Australian drivers alleging that the company was operating illegally in the country.
Around 6,000 taxies, car rental drivers, and license owners have backed the case where they are seeking compensation for lost income or saw a fall in the value of their license.
The case also implies that Uber used a controversial software called Greyball where it blocks law enforcers from gaining access and preventing them from enforcing local laws. Although Uber denies all allegations, the ride-hailing company refuse to pay a settlement to make the problem go away. Unlike, the class action lawsuit filed in the US regarding salary and benefits issues among its drivers.
On other news, in contrast to Lyft’s IPO, Uber may not fair as positively as they would like to expect. Saying it as it is, Lyft is Samsung to Uber’s Apple, they both rest on top of the same battlefield; what one experiences, the other is bound to go through the same. Although Uber may do better. However, as Lyft’s stock dropped after an impressive first day, Uber may well be on the path of enduring the same fate. Lyft’s stock is currently trading at about $61 — more than 15% below its IPO price.
Moreover, Lyft’s stock market outcome may negatively impact possible investors for Uber and may result in much lower profits on its IPO. Particularly, a stock market flop does not necessarily fare well for possible investors on other companies that will technically provide the same set of services.
On top of that, Uber is currently bleeding money same with most tech unicorns it used to climb the ladder of corporate royalty with. Going public may end up as a saving grace rather than a victory lap at this rate.