I know it is early to be talking about Uber stock ownership. At this point, there isn’t an Uber stock symbol, let alone a publicly traded Uber stock price. What we do know is that there will likely be an IPO coming in the not to distant future.
This page will be updated as the world gets closer to the Uber stock IPO.
There are two important topics I want to discuss.
I want to discuss what you can today to further your investment knowledge and have access to the stock market to eventually purchase shares in Uber.
After going over your need to have access to the stock market to buy Uber stock, I want to explain why I think it is a bad idea to do so based on the company’s current business model.
Latest Uber IPO News
- On May 31, 2018, the CEO of Uber said, “I do think that we’re on track in 2019 for an IPO.”
When will there be an Uber stock IPO
There is no set date for the Uber IPO. At this point, we will need to use some deductive reasoning and soundbites to decipher when the IPO will likely be.
Currently, we know, Dara Khosrowshahi, the CEO of Uber, has said the IPO will likely be in 2019. We also know that Uber recently sold its South East Asia unit to Grab. This move is likely part of a strategy to create a favorable context for an IPO as soon as next year.
From where we sit today, we may assume the IPO will be as early as 2019, and potentially as late as 2020. Of course, we don’t know for certain, but we can project this according to language from, Dara Khosrowshahi.
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How to prepare to purchase Uber stock
Open a brokerage account
It is important to signup with a broker to gain access to the stock market. I think it is best to start learning about investing as soon as possible so you can make a proper decision if investing in something like an Uber IPO is wise for your risk appetite.
You can create an investment account with a broker, such as TD Ameritrade. You will have to pay a fee for the purchase of stock with a traditional broker.
You can click here to read my comprehensive TD Ameritrade Review.
I WANT TO LEARN MORE ABOUT TD AMERIITRADE
Download a robo-advisor app and trade for free
You can also signup with a robo-advisor like M1 Finance because it charges no fees for trading. This way you can get in on the Uber IPO with your M1 Finance app and will not incur fees from your purchase of stock.
INVEST FOR FREE WITH M1 FINANCE
Invest in Lyft?
Unfortunately, if you are trying to get in on a pre-IPO, it is very difficult. Of course, there is currently no market yet for a pre-IPO but if there was, you need to be an accredited investor to benefit from this.
Or, you need to know someone very special. The likelihood of this is slim, but if you do know someone, maybe put in a good word for me too? Just kidding, I’m not interested in the Uber IPO😉
It is worth mentioning that there is currently potential to invest in Uber’s main U.S. competitor, Lyft.
By using EquityZen, you may be able to get involved with a deal to invest in Lyft. I confirmed with EquityZen that they have done Lyft deals before and are currently able to do deals as of when I am writing this.
I have not used EquityZen before, so do your research into the company before you proceed in something like this.
If you want to invest in a private offering, this company specializes in this space. Here is additional information on Lyft and EquityZen.
Sharpen your investment skills
As we have a lot of time until the probable Uber IPO, it is never too late to start learning about investing. In my humble opinion, you should start learning about investing right now if you haven’t already started. If you want to learn a bit about investing, you should read my 11 steps to investing, or you can signup for my free email course about your first stock market purchase:
IPO Day
If you decide to purchase during the IPO, you can do so on the day it launches onto the market. If you use a broker, you can put in a market order to try and purchase the stock as soon as possible. You may also wish to put in a limit order if you decide you don’t want to go over a certain price.
Be careful what platform you use if you are trying to buy the IPO day of. Some platforms will only execute trades at the end of the day so you will not be receiving the price of the stock in real time. This may come with a benefit (such as no trading fees) so you will want to weight the options.
Why you shouldn’t buy Uber stock
I know it’s a bit strange I just told you what to do to prepare for the Uber IPO just to explain why I think you shouldn’t get in on it. Basically, I want to educate my readers here at Stock Street…I tell you how things work, give you some ideas, insert my opinion, you do what you want! Trust me, many people don’t listen to my opinion, even though I’m right [caugh] 100% of the time. As Charlie Munger would say, “I’m right, and your smart, and sooner or later you’ll see I’m right.”
IPO’s are hype
Uber’s IPO is undauntedly going to be a hyped-up sideshow if maniacal proportions.
Think Superbowl halftime show, but if it only happened once every 4 years and Michael Jackson was revealed to be alive, then opened with Thriller.
Yep, over the top, but I think you get the point.
IPOs induce the emotional aspects of our psyche. They are hyped up by the media, they are so exciting and enthralling, they have such high expectations, that many investors can’t help but become intrigued.
You may even have this deep desire to be that person at the party who gets to say, “Ohhhh yea, I’m getting in on that Uber IPO.”
But why?
Seriously, why?
What do you see in the company’s economics that leads you to believe it will be any better than the other few thousand stocks you have access to on the stock market?
Reuters did an analysis of the 15 past mega-IPO’s before 2014 and 11 of these lagged the stock market by double-digit margins a year later.
Think about Facebook, Twitter, Snapchat. A year after each of those IPO’s, the stocks lagged.
If anything, maybe what you should do is just wait a year?
I drove for Uber
I have a unique perspective on Uber stock, partly because I drove for the company.
There is a delicate balancing act between Uber partners’ (drivers) incomes, Uber’s profit, and consumer pricing expectations.
Drivers have high costs to drive for Uber.
Gas and vehicle depreciation are serious concerns for drivers, yet Uber has had to keep their rates dirt cheap to battle their competition.
Uber lost over 4 BILLION in 2017 (yes, that is a B, not an M).
They operate at a loss due to intense competition. At some point, it is likely Uber will need to raise rates. Not just to satisfy drivers, but to satisfy their future stockholders as well.
What will happen if Uber raises rates? Will demand decrease? If it does, will drivers leave the platform?
If they raise rates, will new competitors come in, leading to a continued suppression of rates?
What is Uber’s moat? Do they have a strategic advantage?
Amazon has a massive network of distribution centers. What does Uber have? Can I create an app in my local city for less money when Uber raises their rates?
There are just so many questions behind their economics, and their problems are not at all easily solvable.
Uber’s finances
When you purchase a stock, you are purchasing a piece of a business. You are deciding to purchase that one particular business, and not another business. In our capitalistic society, you desire the company that will make profits long term, not the company that will suffer losses long term.
In 2017, Uber lost $4.5 billion on revenue of $7.5 billion.
And a lot of people are pointing out the fact that Uber generated 2.9 billion in revenue in the last quarter of 2016, which was a 74% increase in revenue. However, Uber has some shady numbers, to say the least. Of course, there is no publicly traded Uber stock because it is not a publicly traded company. For this reason, the company has no obligation to show the public any accounting information.
While this is true, they have this strange thing where they only book their portion of the revenue brought in from rides on UberX, yet for its rideshare platform (UberPool), it books the entire revenue.
If Uber takes an average 25% cut of fares and books this in revenue for UberX, yet it shows 100% of fares for UberPool, this is getting a little cockeyed if you ask me.
And Uber is increasing its UberPool market share, so, naturally, their revenue portion of UberPool will proportionally add to revenue, yet this number is quite fake.
I’m ending the Uber accounting rant here. Let’s move onto the valuation rant!
What is up with Uber’s valuation?
In the past year, Uber has pulled out of China and Southeast Asia. Before Uber pulled out of these two MONSTER economies, the valuation was in the $60 billion range, and as of when this is written it is in the $70 billion range.
Now, if I’m an investor in Uber, I have some expectations in my valuation that their overseas units in Southeast Asia, and China ESPECIALLY, are going to be highly profitable in the long term. Otherwise, my valuation of Uber should be lower if they fail in these markets.
Uber is now completely out of these giant economies, yet they still have the same valuation?
It just doesn’t’ make much sense to me.
I know many value companies increase multiples when unproductive units are spun off or closed, but not in a growth company like Uber. They have extremely high expectations, and a lot of those exceptions were likely their potential of winning the war in those two markets.
There isn’t another China, and Southeast Asia shouldn’t be underestimated either.
Will you invest in Uber Stock?
While we are likely at least a year away from an Uber stock symbol and the ability to buy shares of Uber on a listed exchange, you can still sharpen your skills starting today.
You should gain access to the stock market and begin experiencing the buying and selling of securities. This will prepare you for the Uber stock offering by sharpening your skills.
In the end, I just don’t get the intrigue of Uber as an investment, and it seems like hype to me. Whether you listen to me or not, I think we can all agree there will be quite a lot of hype leading up to the big day. I guess we will see what happens.
Anyone out there excited about the IPO? Anyone agree with me?
Disclaimer: These are the ideas and opinions of the author. The author is not responsible for the actions of those who read the posts on this blog. Each individual reader has a unique situation and unique needs. This blog is not intended to solve those unique situations of the readers. This blog is not liable for decisions made by the readers of this blog.
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