Uber's CEO Quits: Is an IPO Now Possible?

Published June 22nd, 2017 - 10:59 GMT
Uber's CEO Travis Kalanick stepped down from his position on June 20, 2017. (Tobias Hase/ AFP)
Uber's CEO Travis Kalanick stepped down from his position on June 20, 2017. (Tobias Hase/ AFP)

Uber's CEO Travis Kalanick stepped down on Tuesday from his position at Uber, following pressure from Uber's investors. The ride hailing service has recently been plagued with incidents, from having been exposed as having a negative workplace culture, to developing technological tools to avoid law enforcement. 

Uber's CEO resignation could be the first step needed to take the company public. Indeed, potential investors believed current management was viewed too negatively to head a public company.

Another potential roadblock to an IPO is a lawsuit by Alphabet (NASDAQ:GOOGL)'s Waymo claiming that Uber's self-driving efforts are fueled by proprietary technology secrets allegedly taken by Anthony Levandowski when he transitioned from Waymo to Uber.

Finally, Uber's own valuation may prevent the company from going public.

Uber's valuation skyrocketed over the past four years. Capital raisings over the past few years have valued Uber up to $68 billion dollars.

Uber's current valuation of $68 billion dollars surpasses the one of General Motors (NYSE:GM), Ford, and Tesla (NASDAQ:TSLA), and investors are wondering whether the company can justify its valuation.

Uber's heads a group of "Unicorns" – venture capital backed companies worth more than a billion dollars.

As venture capital firms rose to prominence, many startups prefer raising private money rather to be exposed to outside shareholder pressure.

The latest turmoil in Uber would have certainly resulted in substantial drops in the company share price.

Therefore, we believe the company will rather wait until the storms pass before taking the company public.

However, there's no knowing whether the market cycle will allow for a pricey IPO, and if the market takes a turn for the worse – we might never see an Uber IPO.

 


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