Biggest IPO in American stock market history

Published on: 02-May-2019
Category: Trading
Last updated: 02-May-2019

Biggest IPO in American stock market history

Uber plans to go public in early May and expects a $ 0.5 billion investment from PayPal. The two companies are preparing for closer cooperation. Uber goes to the New York Stock Exchange (NYSE) and lists its shares under the symbol "UBER". The price is said to be between $ 44 and $ 50, with $ 180 million spent on shares earning $ 7.9 to $ 9 billion. The valuation of the company is $ 90 billion, but about $ 30 billion below the expected value. Nevertheless, this will be one of the largest IPOs in the US so far.

As a mandatory announcement to the US Securities and Exchange Commission showed SEC, PayPal wants to secure a private placement shares at Uber. The payment service provider PayPal is planning to buy $ 500 million worth of shares. Since 2013, the companies have been working together and will now enter into an even closer cooperation with this investment. Car hire agents such as Uber offer rides from private drivers and serve as a platform. Uber will receive a commission per ordered trip. PayPal has been partnering with Uber's payment options since the collaboration began, and is leading the way. The cooperation is beneficial for both companies, as Uber receives money that can be used for the IPO and PayPal is expanding its financial services worldwide.

However, the IPO should not be seen too prematurely as a guaranteed success. The Uber competitor Lyft, which went public a good month ago, had to plug in a decline in value of its shares of 30 percent. The industry is stagnating and is always exposed to new risks. An Uber user books an average of 5.5 trips per month, but this value has not changed for nine months. In addition, the business is difficult to plan because drivers and customers are independent. This is a great advantage of these two groups, but difficult for the company itself. In addition, this independence could soon come to an end, as there are already several lawsuits running, which want to force Uber to lead their drivers as employees. That would have a fundamental impact on the structure of the company and, above all, the price per trip. This development should be considered, but also not overestimated, because initially Uber is one of the largest IPOs of the year.


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