6 Uber IPO Roadshow Takeaways Every Travel Exec Needs to Know
Skift Take
Uber certainly isn't making a profit yet, which isn't the worst thing in the world, considering the mammoth market opportunity. Still, investors in its initial public offering should know it could take several years before that red ink turns black.
With Uber tentatively set to price its initial public offering at a valuation of $80 billion to $90 billion, some takeaways from the company's roadshow are sobering, but they also portray the broad opportunities ahead.
1. Uber Assumes Competition Will Ease
In a video released in connection with the Uber roadshow, Chief Financial Officer Nelson Chai, who joined the company last summer from insurer Warranty Group, said Uber notched a $1.8 billion adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss in 2018, and he expects that red ink to grow larger this year because of increased investment in global growth.
Uber's core platform, which includes ridesharing and UberEats, but excludes "other bets" such as self-driving cars, saw a contribution margin of 9 percent for 2018, but it fell to negative 3 percent in the fourth quarter. That's because of higher incentives paid to drivers in the United States and Latin America, and increased consumer promotions.
Uber projects an adjusted EBITDA margin of 25 percent of adjusted net revenue over the long term, Chai said, but that rests on a huge assumption: that competitive fires will be doused.
“We expect these pressures to abate over the long term, assuming our competitors choose to focus on profitability,” Chai said.
That could be a reas
