Any Potential Uber IPO moving further away with recent PR Nightmares
Tech companies have been making it big in the US IPO market for the past month. It all began with the Snap Inc. (SNAP) IPO. That IPO was tagged one of the biggest in recent tech company IPO history. Then other software and tech companies joined the IPO ship including cloud-storage companies Cloudera (CDRA), Acer’s Veriton (VERI) and online data service provider Yext (YEXT) just to name a few. Most of these IPOs were relatively successful, raising millions within their first days in the market.
When Snap Inc. Launched its IPO, people started asking questions about Uber’s IPO. Uber was supposed to have started trading publicly this year. Everyone wanted to know whether the company would ride the IPO tide that’s been lifting majority of start-ups. But with the recent backlash against the company, you have to wonder if Uber can survive for the next few years, let alone make it through an IPO.
The company started getting unfavorable reports back in 2016. Customers raged when the video of a fight between the tech magnate’s CEO and an Uber driver went viral. Shares tanked with the spread of the video and soon after the CEO resigned. Months later other executives also opted to leave the company, citing everything from bad company culture to discriminatory practices and poor management as their reasons for leaving. The public crucified the tech company for not releasing its diversity reports and more recently, for allegedly ‘stealing’ software from its peer firm, Alphabet.
Uber’s bad PR reputation has incidentally reduced its chances of ever recovering enough to launch a successful IPO. For one, who wants to be associated with a company whose reputation is dwindling in the public eye? Granted, there are those who would invest if the company was making money. That, again, is another strike against Uber. In past years, the $68 billion multinational firm has been running losses running into the billions. When you compare Uber’s 2015 to 2016 proceeds, Uber lost $2.2 billion, and will likely ‘make more losses in the future.’ The company is a money-loser for an investor in addition to being a risky reputational bet.
An Uber IPO could increase the company’s valuation and help it recoup its losses. Tesla (TSLA), America’s most valuable automobile company, grew to up to eighteen times its initial value after its IPO. The same could happen for Uber.
Similarly, companies such as Lululemon (LULU) have come back from their PR nightmares, and Uber could do the same. Lululemon’s case had been spurred by its CEO’s sentiment that the company’s product (sheer stockings) were not meant for every body type. The recovery of Lululemon was prompted by the company’s innovation, and Uber could learn a thing or two from the California-based firm.
As things stand now, however, Uber can shelve any plans to go public as it waits for its recent scandals to blow over. With a little more of public goodwill (like adding to that defense donation they gave earlier this year) and time, the company could take its place in the US stock market. That won’t happen any time soon though.