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Uber promises a bottomless pit of money to investors but is that achievable from a company which has never made a profit

6 May 2019

 

With the Uber IPO launch just around the corner, who would want to invest in a company that has not only never made a profit, but admits it may never do so, as they look to put a price on their shares which will make this the largest technology company float since Facebook went public in 2012

 

Uber hope to raise $10bn in a listing valuing it at around $90bn.Uber CEO Dara Khosrowshahi, went on the road last week, visiting a number of countries in an attempt to charm potential investors. 

At the moment it looks as though demand for shares in the tech giant exceeds availability however, Uber's proposition is considered to be a bit of an oddity because the company has no reported profit, and seemingly none on the horizon.

 

What Uber seem to be doing is asking investors to take a leap of faith by betting on the future, asking them to part with cash based on how people will travel over the next decade, or even century, in-effect meaning potentially short to medium-term pain but long-term game with I potentially bottomless pit of opportunity.

 

Uber's target market, including areas that it doesn't operate in at the moment, could be worth an incredible $5.7 trillion. Interestingly, the word "trillion" features in theor float prospectus more than sixty times. 

 

According to a report in The Guardian, after including food delivery, restaurants, freight companies and the autonomous vehicle market, Uber's ability to eventually be able to turn a profit could glean astronomical rewards. 

 

The trillions spoken of is not a guaranteed financial stream, but more of a fiscal wishlist, made in an attempt by Uber to separate potential investors from their cash.

 

Of course, Uber in its quest to attract investors, has had to be seen to be making attempts in cleaning up it's reputation. 

 

Damage from legal and regulatory clashes across the planet, a major cover-up pertaining to a data breach, its questionable approach in dealing with allegations of sexual assault against a significant number of it's drivers along with other indiscretions have not endeared the company to potential investors. In fact as recently as last week, Dara Khosrowshahi admitted that “in getting from point A to point B, we didn’t get everything right”.

 

So will this perceived contrition and humility be enough to persuade investors to take a gamble on a non-profit making company.

 

Image Source: Flickr 

Image Author: École polytechnique - J.Barande

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