Uber Technologies Inc. took a conservative approach to its initial public offering Thursday, picking a share price toward the bottom of the marketed range and at a valuation below its last private funding round. On Friday, public market investors will get to decide whether that was a good idea.
The No. 1 ride-hailing company's shares will start trading on the New York Stock Exchange after it raised $8.1 billion in the biggest U.S. IPO since 2014, pricing shares at $45 each. It had marketed them for $44 to $50 apiece.
In distributing the stock, Uber prioritized shareholders — particularly institutional investors — that it thinks will hold on to the shares for a long time, according to a person familiar with the matter. The company is hoping to avoid the tumultuous first weeks of trading in rival Lyft, whose shares fell below its $72 IPO price within days of listing and closed 23% below that price Thursday.
Based on the amount of stock outstanding after the offering, Uber's IPO price gives the San Francisco-based company a market value of $75.5 billion. Its last private market value was $76 billion. The fully diluted value in the IPO, including restricted stock units and other shares, could be about $82 billion.
"We view Uber's conservative pricing as a smart and prudent strategy coming out of the box as it clearly learned from its 'little brother' Lyft, and the experience it has gone through over the past month," Wedbush Securities analyst Dan Ives said. Uber's biggest competitor briefly dipped below its last private value of $15.1 billion in pre-market trading Thursday, before rebounding to close at $55.18 for a valuation of about $15.8 billion.