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Uber IPO: 'The first day of trading won’t be the ultimate driver of its value'

Brian Sozzi

Facebook’s IPO day on May 18, 2012 was an unabashed disaster. But almost seven years later, the stock has skyrocketed about 510% as CEO Mark Zuckerberg has led a social media revolution.

The same outcome could happen to Uber (UBER) even if its first trading day goes south, says one former tech investment banker. It just boils down to whether Uber could revolutionize transportation and food delivery as a service as Facebook (FB) has done to social media.

“The first day of trading won’t be the ultimate driver of its value,” SoFi CEO Anthony Noto tells Yahoo Finance.

“The company has been incredibly valuable from a consumer value perspective — Uber is at the very beginning of what it could create over time,” Noto adds.

SoFi’s top executive — an online lender turn investment product offerer — is no stranger to pounding the pavement on a roadshow and watching the first day of trading for a newly public company.

Noto worked on numerous IPOs while serving as a tech, media and telecom investment banker at Goldman Sachs. He played a key role at Goldman in the November 2013 IPO of social media platform Twitter. Noto then joined Twitter as COO in July 2014, leaving in February 2018 to assume the top job at online lender SoFi.

And in fact, Noto helped raise money for Uber and still has friends at the company.

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Here comes Uber

Demand for Uber’s stock in the lead-up to its hotly anticipated IPO on Friday looks so-so. Uber may price its IPO at the midpoint of its target or below, The Wall Street Journal reported Wednesday. At the low end of an expected $44 to $50 range, Uber may be reportedly valued at $80 billion.

Speculation in the months before Uber’s IPO had pegged its valuation as high as $120 billion.

Spokespeople for Uber’s lead underwriters — Goldman Sachs and Morgan Stanley — declined to comment on the pricing.

The disappointing valuation isn’t a total shocker. For one, President Donald Trump tossed a time bomb into the stock market this week by threatening fresh tariffs on China by Friday. Hence, stocks have come well off their record highs.

Further, Uber’s financial standing is in worse shape than rival Lyft’s (who has seen its stock tank since a late March IPO).

Uber by the numbers

The owner of Uber Eats and its eponymous ride-hailing service saw its sales spike 43% last year to $11.3 billion. But, the company lost $3 billion on top of a $4 billion loss in 2017. Overall growth continued to slow in most areas of Uber’s business, too.

Uber’s cash flow from operations the past three years was an outflow of $5.8 billion.

Brian Sozzi is an editor-at-large and co-host of ‘The First Trade’ at Yahoo Finance. Follow Brian Sozzi him on Twitter @BrianSozzi

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