Uber and Lyft have for years battled for patrons within the fast-growing ride-hailing enterprise. Now the bitter rivals might battle for traders of their preliminary public choices.
Uber has obtained proposals from the funding banks Morgan Stanley and Goldman Sachs that say the expertise large might be value as a lot as $120 billion in an I.P.O., two folks briefed on the matter who weren’t allowed to debate it publicly mentioned on Tuesday.
At $120 billion, Uber’s debut on Wall Avenue could be the largest for the reason that Alibaba Group of China started buying and selling on the New York Inventory Trade in 2014.
The marketplace for tech I.P.O.s has surged in 2018. Practically 200 corporations have raised greater than $53 billion in preliminary public choices in American markets, making it the busiest 12 months for tech newcomers to Wall Avenue since 2014, in response to knowledge from Dealogic.
However a blockbuster public providing for Uber, which has burned by way of billions of dollars because it was based in 2009 and doesn’t seem like near sustained profitability, would mark a major enhance in risk-taking for traders in publicly traded corporations.
The banks additionally urged that Uber may record its shares for buying and selling on the inventory market sooner than its unique plans for late 2019. That may put strain on the corporate’s principal rival in america, Lyft, which just lately picked JPMorgan Chase to steer its personal preliminary public providing, mentioned two different folks briefed on the matter who weren’t allowed to talk about it publicly.
This 12 months, Lyft’s newest fund-raising spherical valued the corporate at $15 billion. It had been planning to go public within the spring, placing distance between its I.P.O. and Uber’s.
Now the businesses may discover themselves in a race to the general public markets, courting traders longing for a chunk of two distinguished tech business darlings. The corporate that goes first is anticipated to have a bonus and will demand the next worth for its shares.
“The primary ride-sharing I.P.O. will get plenty of consideration, so I believe there’s some advertising and marketing worth to being the primary one out of the gate,” mentioned Kathleen Smith, a principal at Renaissance Capital, which supplies analysis and manages funds.
Uber’s potential worth in a public providing and Lyft’s underwriter have been first reported by The Wall Street Journal on Tuesday.
Uber’s I.P.O. is likely to be among the biggest financial events on Wall Street next year. At $120 billion, it would rival the total value of Facebook when it went public in 2012 with a market capitalization of $104 billion, Ms. Smith said.
Unlike Facebook in 2012, Uber is not profitable on a day-to-day basis. Uber has been trying to shed its most money-losing businesses since Dara Khosrowshahi became its chief executive last year and has pulled back from expensive expansion plans in Russia, China and Southeast Asia.
The company did turn a profit in the first quarter of 2018 thanks to the sale of some of those operations, but the second quarter was a return to form. Uber reported a $891 million loss, even though its bookings — the amount of money taken in by drivers — were up 41 percent from a year earlier and its revenue hit $2.7 billion.
As a privately held company, Uber is not required to publicly disclose its quarterly results. But for some time it has revealed basic financial information to give investors a better sense of its health.
The $120 billion valuation would also be a huge jump from earlier estimates. In December, the Japanese conglomerate SoftBank and a consortium of investors announced plans to buy 17.5 percent of Uber at a price of about $33 a share. That put Uber’s value at about $48 billion.
At the time, Uber was struggling to overcome a range of management issues, and the SoftBank investment was a steep discount from earlier rounds, which priced the company as high as $70 billion.
A $500 million investment made by Toyota in August valued Uber at $76 billion.
The San Francisco company is aggressively trying to increase business for UberEats, its food delivery business, and is expanding into rentals of electric bikes and scooters, as well as bookings for freight shipments.
Lyft, which is also based in San Francisco, has always been Uber’s much-smaller but toughest competitor in the United States. It started expanding outside the country just last year, and has largely avoided the regulatory fights and bad publicity that have plagued Uber all over the world. Like Uber, Lyft sees bike and scooter rentals as a way to expand. It acquired Motivate, the owner of CitiBike, for a reported $250 million in July.
Lyft said revenue for 2017 was $1 billion — a 168 percent increase from the year before — but did not disclose its profits or losses for the year. Financial analysts assume Lyft, like Uber, has burned through significant amounts of cash.
Uber and Lyft are both working on autonomous vehicles. Executives believe that driverless cars could eliminate one of their biggest expenses — human drivers. But the technology is, for the moment, prohibitively expensive and far from wide commercial use.
Uber has considered selling its autonomous vehicle unit, while Lyft has mostly pursued the technology through partnerships.
A lack of profits is unlikely to scare off investors. Much as it did during the dot-com boom nearly 20 years ago, Wall Street is cozying up to tech companies that are growing fast but burning through cash.
“I think investors are going to be comfortable with Uber,” Ms. Smith said. “The issue is going to be at what price.”