The Uber IPO Will Be Like Chernobyl For The IPO Market

Remember a long time ago — like 11 whole days — when Lyft went public at a nosebleed valuation despite hemorrhaging money and genuine confusion on The Street about how it would ever make money?

Well, this is how that whole thing played out:

Lyft is in a freefall after pulling out of a freefall. The latest tech unicorn IPO with no profit, no clear indication of how future profits would be generated, and codified disinterest in letting shareholders tell them how to be profitable. Essentially, we’ve spent five years watching wildly overvalued tech startups attempt to raise capital in the public markets without having to behave like a public company.

It’s gone very badly.

So, after the IPOs of Etsy, Snap, and Blue Apron — is the market finally ready to capitulate to reason and make adult choices with all this cheap money we have lying around thanks to still very low interest rates?

Well…

Uber Technologies Inc has decided it will seek to sell around $10 billion worth of stock in its initial public offering, and will make public the registration of the offering on Thursday, people familiar with the matter said on Tuesday…

Uber is seeking a valuation of between $90 billion and $100 billion, influenced by the poor performance of smaller rival Lyft Inc’s shares following its IPO late last month, the sources said. Investment bankers previously told Uber it could be worth as much as $120 billion.

What a staggeringly stupid way to say “No.”

You guys remember Uber, right? The prodigal son of tech unicorns. The original genuine bad boy mega-startup infamous for how synonymous it became with the kind of venal, nerd frat behavior that is only acceptable in finance and Biglaw. The very same Uber that raised over $24 billion in private equity before losing its CEO and most of its board to an aforementioned neverending parade of scandals, and what we assume is referred to in corporate law-speak as general dumbassery.

Uber is also Lyft’s bigger, badder competitor and the IPO that Wall Street had been waiting on for years before Lyft came to market. So, with Lyft pooping the allegorical bed less than two weeks into life as a public company we have to assume that Uber must be doing great if it thinks it’s about four times more valuable than Lyft. Or it must be, at the very least, not posting annual losses like Lyft and the other disaster unicorns:

Uber last year had revenue of $11.3 billion, while gross bookings from rides was $50 billion. But the company lost $3.3 billion, excluding gains from the sale of its overseas business units in Russia and Southeast Asia.

A $100 billion valuation for a company that made -$3.3 billion last year? Is everyone f***ing high?

And what makes this weirder is that Uber isn’t even peddling the upside of a messianic founder hellbent on keeping his brainchild “disruptive” and “revolutionary.” Probably because that BS only makes sense if the messianic founder is still at the company. Uber’s infamous founder Travis Kalanick is on a walkabout somewhere likely plotting his revenge for the very day his non-compete expires. Right now, Uber is being run by Dara Khosrowshahi, the platonic ideal of the guy you bring after a bad IPO to right the ship. His very presence is a clear indicator to most analysts that Uber feels its days of visionary thinking are behind it. In fact, Khosrowshahi’s biggest role on the coming IPO roadshow will be to brag that Uber has gone months without media reports of inexcusable sexual misconduct.

But we would argue that the one question that everyone should be asking Khosrowshahi is why Kalanick was so determined to never take Uber public ever? What did he know that his successor doesn’t? Has there been a fix to the whole problem with the inherently bad revenue structure that takes in massive gross revenues and then bleeds it into startling net losses? That -$3 billion thing would indicate not. Travis didn’t want to offer shares until he had cars that drove themselves. Where are you at there, Dara?

Nothing pleases us more than drawing big, simplistic comparisons between all of these disastrous tech IPOs, but we can only draw a few with Uber. Not because Uber is better, but because it is so, so, so much worse. What we’ve seen so far has been merely a chain of small, preventable explosions acting as an ominous prelude to the Chernobyl that will be the Uber IPO.

Uber is asking for the most capital while losing the most money, exhibiting the least likely possibility for growth, still reeling from its messy creation story and looking at a data set that conclusively shows ridesharing IPOs are not super hot right now.

What Uber is doing is what almost every tech unicorn IPO in the last five years has done: ask the markets to ignore fundamentals or basic reason, and instead layer their appetite for risk onto something cool and rely on the fact that money is still super cheap. It hasn’t worked so far, but Uber is looking at the calendar, figuring that the dark economic days are almost upon us and daring investors to take their chips and go all in on something that they were super horny for two years ago.

It’s going to be a cataclysmic sh**show.

Uber’s IPO will be oversubscribed in a matter of hours, the thing will pop immediately upon trading, dive like a Boeing 737 on day two and bleed out massive amounts of value slowly for months before popping a week before lockouts expire…and then it will implode. We’ve seen it before, but never at this scale, and the sheer carnage of a $100 billion Blue Apron on wheels will be like a death cure for this IPO illness.

But hey, it’s not going to to be boring.

Exclusive: Uber plans to sell around $10 billion worth of stock in IPO – sources [Reuters]