Will Uber Be the Hottest IPO of 2015? - Stocks in the News

Category: In The News Published: Saturday, 10 January 2015 Written by Admin

Picture this: its 3 oclock in the morning, and all you want to do is leave the overcrowded bar, eat some pizza, and go to bed. Or you bought way too much stuff at Target-because of course you had to look through the clearance aisles-and there is no way youre getting all those bags home on the bus without tripping or falling. Or you just had a long, stressful day at work, and the thought of squishing yourself in with thousands of other commuters on the train makes you want to die a slow and painful death.

So what do you do?

Pick up your phone and open the Uber app, and like a fairytale, your transportation woes vanish with the digital sight of a car heading your way.

Launched back in 2010, Uber is an app-based transportation company headquartered in San Francisco, California. Today, it operates in numerous cities across the United States as well as more than 50 countries worldwide. The company uses a smartphone app to receive ride requests, and then sends out these requests to their drivers who transport the customers to their final destinations.

Uber Controversy

While Uber has seen great success, it has run into some roadblocks as of late.Uber has been in and out of the news thanks to legal and publicity issues in a variety of countries for a number of issues. Right now, the company faces trouble in New York City for noncompliance due to a failure to adhere to requests from the citys Taxi amp; Limousine Commission. 5 out of 6 Uber bases have been unwilling to provide any electronic trip data, legal documents allege.

Because of increased regulatory concerns and lack of driver background checks, Uber has been banned in The Netherlands, Thailand, and India. Scrutiny has increased in Vietnam, Singapore, and Indonesia due to these same issues. Portland, Oregon and the state of Nevada have suspended Uber services due to regulatory concerns as well.

As the saying goes, any publicity is good publicity, and this recent bad press has yet to negatively affect Uber. In fact, Uber is already rumored to be generating about $2 billion in net revenue annually, not bad for a company that is less than a decade old.

Uber IPO

Despite these recent controversies, investors are eagerly awaiting an Uber IPO. Many believe that the company will go public at some point this year, continuing the recent IPO boom.

An upcoming IPO for Uber would also be massive, as the company is currently valued at an amazing $41 billion after landing $1 billion in financing at the beginning of last December. And thanks to Ubers structure-a unique combination of transportation company, mobile Internet company, and real world engineering-the company is being touted as one of the best IPO candidates for 2015.

2015 IPO Field

Uber joins a varied list of companies with potential high profile IPOs in 2015. Airbnb, a room rental service, is worth an estimated $13 billion, which makes it worth more than well-known hotel chains Wyndham ( WYN ), Holiday Inn owner InterContinental Hotels ( IHG ), and Hyatt ( H ).

Snapchat, the popular photo and video sharing app, is also seen as a hot IPO prospect. The reported value of the company is an estimated $10 billion.

Spotify and Pinterest, the former a worldwide leader in digital music and the latter a site used to create digital pin boards, are both amid swirling rumors of high profile IPOs for 2015.

This barely scratches the potential IPO offering for the year though, suggesting that we could see a very busy year for initial public offerings in a number of market sectors.

Continuing the Trend

If even a fraction of these companies go public, it will continue the IPO boom that investors witnessed in 2014. The past year was the best in more than a decade for IPOs as more than $85 billion was raised in offerings, a huge increase over 2013s $54.9 billion total.

Among the biggest IPOs of the year were portable HD camera maker GoPro ( GPRO ), Candy Crush developer King Digital ( KING ), and peer-to-peer lending company Lending Club ( LC ). This group had very mixed performances in 2014 with GPRO adding more than 100% as KING shares slid to the tune of 20% (LC made its debut in December and was up 6.4% in its first few weeks on the market).

Yet all of these pale in comparison to the IPO of Chinas biggest online commerce company, Alibaba ( BABA ). This firm dominated IPO headlines, and was a huge influence on trading in Yahoo (YHOO) stock as well.

The company raised nearly $22 billion in its offering, making it the largest US IPO of all time. BA BA stock , meanwhile, has seen immense volatility since its debut in September, though the stock has risen over 10% for its trading in 2014, easily beating the market in the time frame.

How Might Uber Perform?

Ubers IPO, then, could go either way, but let one number stay in your mind; $41 billion. Let me write that again: $41 billion. This number, Ubers valuation, is a hard one to forget, and a figure that will be on the forefront of many investors minds come the time of the offering as it showcases just how far this startup has come in a few short years.

The pressure will likely be intense for Uber though, as competitors like Lyft and Sidecar are starting to eat into market share, while regulatory issues and bad PR arent helping the companys image.

However, it is hard to bet against a company that has seen such massive growth, and it seems likely that this will be another IPO that draws in the retail investor who is looking to cash in on an increasingly household name that is going public for the first time. So make sure to keep your eyes peeled for an Uber IPO later in the year, as this could definitely be the hottest offering of 2015 by far.

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