Stock Market News Today — Uber Technologies Inc. ratcheted down its target valuation to a range of about $80 billion to $90 billion for its initial public offering, according to people familiar with the matter.
The ride-hailing giant is seeking to price its shares between $44 and $50 apiece, the people said. It aims to raise $8 billion to $10 billion in the IPO, one of the people said. Uber had previously given documentation to holders of its convertible notes outlining a potential price of $48 to $55 a share, which would have been a valuation between $90 billion and $100 billion on a fully diluted basis, The Wall Street Journal previously reported.
Uber’s target is the latest calibration downward for the ride-hailing service as it careens toward its IPO, expected to be the second-largest U.S.-listed debut in history, behind Alibaba Group Holding Ltd., as measured by market capitalization. Lead underwriters Morgan Stanley and Goldman Sachs Group Inc. had pitched a possible valuation of as much as $120 billion last year.
Uber is expected to make the price range public in a filing Friday morning, a person familiar with the matter said. Its exact IPO price will be decided over the coming weeks as Uber executives engage in a string of formal pitch meetings with potential investors, and it could still rise depending on their interest.
The filing is also expected to include news of a roughly $500 million investment in Uber by PayPal Holdings Inc., according to people familiar with the matter. The mobile-payments company, which already helps the ride-hailing firm process fares, will invest in Uber through a private placement at the IPO price, these people said.
One reason for Uber’s lowered valuation target is that smaller rival Lyft Inc. has struggled as a newly public company. Lyft’s IPO priced at $72 a share last month, well above its last private funding round and higher than the initial range targeted by the company and its underwriters.
Lyft’s shares opened sharply higher on their first day of trading, but in the weeks since, the stock has suffered. On Thursday, Lyft’s stock declined 2.6% to $56.34, putting it 22% below its IPO price.
Some fund managers considering the Uber IPO have said Lyft’s decline makes them more uneasy about scooping up Uber shares, as the woes underscore the risky nature of buying into large, highly unprofitable companies.
People close to the IPO process say an investment from a major player in tech like PayPal would represent a vote of confidence that could help shore up demand for the shares. Uber is expected to begin trading in early May, the biggest in a list of high-profile IPOs that have already happened or are expected to come this year. Bloomberg earlier reported on Uber’s latest IPO targets.