SAN FRANCISCO - Uber and Lyft are hoping a courtroom reprieve will spare them from shutting down their rival smartphone-summoned ride services in California on Friday.
The companies are awaiting word from an appeals court whether they will be able to delay having to abide by a new state law that officials argue requires them to reclassify drivers as employees entitled to worker benefits.
A judge gave them until the end of Thursday to make the change, which both companies argue is too complex and costly to do quickly.
Uber and Lyft have said they will suspend ride services in their home state, most likely until after voters in November determine the fate of a proposition they are sponsoring.
The proposition, which would become law if approved, would keep drivers classified as contractors but provide benefits such as health care.
"California is trying to do the right thing, but this is the wrong time for it," said technology analyst Rob Enderle of Enderle Group, referring to a job market crippled by the pandemic.
"This is not a time when you want to knock a whole lot of people out of work, which is the danger here."
A judge last week granted a restraining order in a lawsuit filed by California attorney general Xavier Becerra and three cities including San Francisco, where Lyft and Uber are based.
The suit calls on the two rideshare companies to comply with a new state law that requires "gig workers" to be classified as employees, eligible for unemployment, medical and other benefits.
- Driverless future? -
A judge ordered Uber and Lyft to reclassify drivers as employees and has refused pleas to extend his deadline past Thursday, according to an appeal filed by Lyft.
"Because Lyft cannot make the changes the injunction requires at the flip of a switch, absent immediate action by this court, Lyft will be forced to suspend its rideshare operations in California," the company argued in its appeal.
This would cause "widespread disruption to hundreds of thousands of drivers, millions of riders and the state's transportation infrastructure," according to the appeal.
Uber's chief executive Dara Khosrowshahi has said the company will "have to essentially shut down Uber until November when the voters decide."
Uber and Lyft back a referendum to overturn the law, while pledging to provide benefits for a social safety net that would keep gig workers independent.
The rideshare rivals maintain that most of their drivers want to remain independent even if they also are looking for benefits.
"We don't even know if we are going to keep driving, because of this situation," said Alexander Palacios, a 43-year-old Uber driver in Los Angeles.
"Honestly, I don't mind, because I think Uber and Lyft deserve it because they've been doing really bad to drivers for a long time."
A backup plan for Uber would be to pause operations in California, eventually restarting with "a much smaller service, much higher prices" according to Khosrowshahi.
The threat to its business model puts pressure on Uber to move faster toward its vision of dispatching self-driving cars to provide rides on demand, Enderle said.
"Uber is pivoting to autonomous cars, so something was going to happen to the drivers anyway," Enderle said.
"You were either going to be an employee or you were going to be unemployed; there was a sword of Damocles hanging over this anyway."
Agence France-Presse
NEW YORK -- Uber is offering $6 billion in stock in its takeover bid for meal delivery group Grubhub, a source familiar with the talks said Wednesday.
The two firms were not in agreement on a deal that would unite two of the three largest US players in the food delivery segment, according to the source who declined to be identified.
The $6 billion share offer was first reported by The Wall Street Journal.
Grubhub shares, which rose sharply on the reports of a tie-up earlier this week, slipped 3.7 percent on Wednesday.
Neither company commented on the potential tie-up but Grubhub said in a statement it is "squarely focused on delivering shareholder value" and added that "like any responsible company, we are always looking at value-enhancing opportunities."
Uber has been seeing strong growth in its food delivery operation Uber Eats, partly offsetting the sharp decline in ride-hailing during the global pandemic.
According to the research firm Second Measure, Uber Eats accounted for 20 percent of US meal delivery sales in March and Grubhub had 28 percent. A combined operation would overtake number one player DoorDash, which had 42 percent.
Agence France-Presse
LOS ANGELES - Uber Technologies Inc is closing its office in downtown Los Angeles, where the ride-hailing company employs customer support staff, to focus on its bigger locations.
The move was reported earlier on Tuesday by the LA Times newspaper, which also added that the step will result in the elimination of about 80 jobs.
An Uber spokesman confirmed the closure in an emailed statement.
The jobs from the office being closed will be shifted to a customer support office of Uber in Manila, the LA Times reported, citing sources and a recording of comments from an Uber manager.
Uber did not comment on the job losses mentioned in the report.
Earlier this month, Uber, which is backed by Japanese technology investment giant SoftBank Group Corp, moved forward by a year its target to achieve a measure of profitability to the fourth quarter of 2020, but added it still expects to lose a total of more than $1 billion this year.
In the fourth quarter of 2019, the company's total revenue rose 37 percent to $4.07 billion on a yearly basis while its net loss widened to $1.1 billion from a loss of $887 million a year earlier.
source: news.abs-cbn.com
LAS VEGAS -- Hyundai announced Monday it would mass produce flying cars for Uber's aerial ride-share network set to deploy in 2023.
The South Korean manufacturer said it would produce the four-passenger electric "vertical take-off and landing vehicles" at "automotive scale," without offering details.
The deal announced at the Consumer Electronics Show in Las Vegas could help Uber, which is working with other aircraft manufacturers, to achieve its goal of deploying air taxi service in a handful of cities by 2023.
Jaiwon Shin, head of Hyundai's urban air mobility division, said he expects the large-scale manufacturing to keep costs affordable for the aerial systems.
"We know how to mass produce high quality vehicles," Shin told a news conference at CES.
He said he expected the partnership to allow for the short-range air taxis to be "affordable for everyone."
Eric Allison, head of Uber Elevate, appeared at the CES event with Hyundai to discuss the partnership.
"By taking transportation out of the two dimensional grid on the ground and moving it into the sky, we can offer significant time savings to our riders," Allison said.
He said that because of its other app-based transport options, "only Uber can seamlessly connect riders from cars, trains and even bikes to aircraft."
Uber has announced it had selected Melbourne to join Dallas and Los Angeles in becoming the first cities to offer Uber Air flights, with the goal of beginning demonstrator flights in 2020 and commercial operations in 2023.
Hyundai is using CES to show the S-A1 model aircraft with a cruising speed up to 180 miles (290 km) per hour.
The aircraft utilizes "distributed electric propulsion," designed with multiple rotors that can keep it in the air if one of them fails.
The smaller rotors also help reduce noise, which the companies said is important to cities.
The Hyundai vehicle will be piloted initially but over time will become autonomous, the company said.
Agence France-Presse
NEW YORK- About a decade after co-founding Uber, Travis Kalanick on Tuesday severed his last ties with the ride-hailing giant, announcing he would exit the board of directors at the end of 2019.
Kalanick, who was pushed out as chief executive in 2017 amid revelations about the controversial business practices that accompanied the company's stunning rise, will resign from the board of directors effective Dec. 31 "to focus on his new business and philanthropic endeavors," Uber said in a statement.
"Uber has been a part of my life for the past 10 years. At the close of the decade, and with the company now public, it seems like the right moment for me to focus on my current business and philanthropic pursuits," Kalanick, 43, said in a statement released by the company.
"I'm proud of all that Uber has achieved, and I will continue to cheer for its future from the sidelines."
In March 2018, Kalanick announced the creation of a new investment vehicle, 10100, that will focus on both for-profit and non-profit ventures. The key areas of focus for the fund include real estate, e-commerce, and innovation in China and India.
Among his most recent ventures, Kalanick has developed the so-called "ghost kitchen" company, CloudKitchens, which will rent communal kitchens near population centers that can prepare food for delivery services.
Even before Tuesday's announcement, Kalanick had taken steps to further distance himself from Uber, selling a large portion of his shares in early November.
The youthful Kalanick has been the personification of the go-go Silicon Valley disruptor associated with visionary entrepreneurship that upends traditional businesses, accompanies by unfettered growth.
GROWTH AND GROWING PAINS
Kalanick and fellow Uber co-founder Garrett Camp got the idea for Uber while visiting Paris in December 2008 when they were unable to find a taxi.
UberCab launched in July 2010 in San Francisco. The company name was shortened in October to Uber.
The venture has grown rapidly since then, with operations in 700 cities in 65 countries at the time of its initial public offering in May.
Kalanick resigned from Uber in June 2017 amid heavy pressure following a series of disturbing reports about cutthroat workplace culture, harassment, discrimination and questionable business tactics to thwart rivals.
The company appointed former Expedia chief Dara Khosrowshahi as chief executive later this year.
Khosrowshahi has taken steps to clean up the company's image, including upgrading its rider safety programs and disclosing figures on sexual assaults.
But the company also still faces plenty of challenges as critics complain of excess traffic, aggressive labor practices and other ills. A regional court in Germany last week barred Uber from offering rides through car hire firms.
Wall Street analysts have also questioned the company's long-term profit prospects.
Khosrowshahi said Tuesday that "very few entrepreneurs have built something as profound as Travis Kalanick did with Uber."
Board Chairperson Ron Sugar thanked Kalanick for "his unique expertise, honed over 10 years building Uber from a scrappy startup into the global public company."
Uber shares, which have fallen more than 25 percent since the company went public in May, rose on Tuesday in a holiday-shortened session.
Shares gained 0.4 percent to finish at $30.44.
source: news.abs-cbn.com
TOKYO - Japanese giant SoftBank Group suffered an operating loss of $6.4 billion in the second quarter, it said Wednesday, as investments in start-ups such as WeWork and Uber took a massive hit.
In the three-month period ending September 30, operating losses hit a whopping 704.4 billion yen ($6.4 billion).
The firm said first-half operating losses from its Vision Fund and Delta Fund came to 572.6 billion yen, largely "due to a decrease in the fair values of investments including Uber and WeWork and its three affiliates".
Net profit in the six months to September sank 49.8 percent to 421.6 billion yen on an operating loss of 15.6 billion yen.
The company did not publish its outlook for the year to March 2020, but uncertain roads lie ahead as shares in its key investments like Uber and Slack continue to slide.
SoftBank's flamboyant founder Masayoshi Son has faced renewed scrutiny of his investment acumen in the wake of WeWork's dramatic fall from grace.
Last month, SoftBank confirmed that it was injecting billions of dollars into WeWork, once hailed as a shining unicorn valued at $47 billion at the start of the year.
The start-up has gone from an investor darling to cancelling its IPO and seeing its co-founder Adam Neumann pushed out, albeit with a reported package of more than $1.5 billion.
source: news.abs-cbn.com
It was late on a Friday night in a Long Island beach town, and a 15-year-old girl was trying to get home from a party. So, like many teenagers in similar situations, she got in an Uber.
The ride-sharing company does not allow unaccompanied riders under age 18, but teenagers frequently travel in Ubers alone, experts said. In most cases, the rides are believed to occur without incident.
But on July 12, a parent’s worst fears came true when the driver who arrived did not bring the girl safely home. Instead, prosecutors said, he kidnapped her and tried to take her to his place in Brooklyn, where he intended to sexually assault her.
"He took advantage of the situation," Nassau County District Attorney Madeline Singas said Tuesday. "He found a vulnerable victim and he preyed upon that."
The girl escaped after persuading the driver to pull over so she could use the bathroom, prosecutors said, then calling the police.
The driver, Sean Williams, was arrested 4 days later and charged with two counts of felony kidnapping, as well as child endangerment and unlawful imprisonment.
Williams, 32, pleaded not guilty in Nassau County Court last week. If convicted, he could face up to 25 years in prison on the top count.
His lawyer, Steven Gaitman, disputed the prosecutors’ account, saying there was more to the case than the district attorney was claiming, though he said it was too early to elaborate.
The 15-year-old, whom prosecutors did not identify because she was a minor, had been attending a Sweet 16 party in Atlantic Beach, New York, a seaside village on a barrier island. Williams picked her up at about 11:15 p.m. and was supposed to drive her home to Merrick, about 30 minutes east.
The girl’s family does not have a car, prosecutors said, and public transit was not an option.
When Williams arrived, Singas said, he motioned for the girl to get in the front seat, which she did, and then began driving east through the city of Long Beach.
But at some point in Long Beach, Williams canceled the ride in the Uber app and began driving away from Merrick, westward, toward his home in Brooklyn, Singas said.
“When he cancels that route, the GPS turns off, and the ride is terminated,” she said. “For us, that’s sort of a consciousness of guilt. You know, he’s taking her somewhere that he’s not supposed to take her, and he cancels the route so we can’t see where he’s going.”
While driving, Williams told the girl that he wanted to take her drinking, Singas said. The teenager refused, repeatedly telling Williams her age. When it became clear that Williams was driving the wrong way, she requested that he take her home.
According to prosecutors, Williams declined. Because the girl was in the front seat, she was afraid to pull out her phone and call the police or text her parents in case Williams saw her, Singas said.
“She was scared, and she didn’t know how he would react to that,” she said.
Just after they crossed into Brooklyn, the girl told Williams she needed to use the bathroom, prosecutors said. He pulled the car over, and she ran into a McDonald’s on Linden Boulevard in East New York, where she called the police.
Williams followed her, prosecutors said, but fled before officers arrived at the restaurant, which Singas said was about 10 minutes from Williams’ home.
Based on conversations recounted by the girl, prosecutors believe that Williams had been planning to “engage in some kind of sexual misconduct” with her, Singas said.
But Gaitman took issue with the prosecutor’s account.
“She had a phone with her the entire time,” he said. “When she made the request to go to the bathroom, he obliged. And certainly those factors alone don’t lend themselves to a kidnapping.”
Williams, who also works in real estate, had been driving for Uber for about six months, his lawyer said.
In a statement, Uber said that Williams was no longer driving for the company and that his access to the app was terminated in July once the accusations were reported to Uber.
Both Uber and its ride-sharing rival Lyft prohibit children younger than 18 from riding in vehicles without an adult. Both companies said they asked drivers to report passengers who violated the policy.
But the policy is regularly broken, experts said. And though drivers are tasked with enforcing the rule, they often have little financial incentive to do so, according to Harry Campbell, who writes about the industry at his blog The Rideshare Guy and occasionally drives for Uber and Lyft.
Ride-sharing apps are attractive to teenagers who do not want to rely on their parents for transportation and to parents who do not have time to chauffeur their children around.
The relatively low price of getting a for-hire car also makes the apps enticing, Campbell said.
“It definitely has given kids a lot more freedom,” Campbell said.
“The cost is so cheap for these rides that they could literally be paying for their own rides.”
According to a poll conducted by the C.S. Mott Children’s Hospital at the University of Michigan, 1 in 8 American parents said their teenager had used a ride-sharing service.
But because the poll was taken by parents, Gary L. Freed, the co-director of the poll and a pediatrics professor at the University of Michigan, said it was possible the portion of teenagers using Uber and Lyft was even higher.
“There’s no real way of knowing,” Freed said. “They’re prohibited from using them, but we know that they do, and we know that ride-share companies don’t require identification or age verification.”
The Mott poll also found that two-thirds of parents were concerned that a ride-share driver might sexually assault their teenagers.
Given the ease of circumventing the companies’ policies, Freed said parents concerned about their children’s safety should have open discussions about ride-sharing apps.
He suggested that parents encourage their children to speak out if they are worried about a driver’s behavior, use the apps to share their routes and whereabouts, and call 911 if they feel they are in danger.
source: news.abs-cbn.com
Uber Technologies Inc reported a $5.2 billion loss and revenue that fell short of Wall Street targets on Thursday as growth in its core ride-hailing business slowed, sending its shares down 6%.
Uber's net loss, up from a loss of $878 million a year earlier, reflected $3.9 billion of stock-based compensation expenses related to its IPO earlier this year, and Wedbush analyst Ygal Arounian said its loss before interest, tax, depreciation and amortization was in line with Wall Street targets.
Still, he said, "So far, mostly everything is below expectations."
The figures caught investors off guard because smaller rival Lyft Inc on Wednesday had raised revenue expectations and described an easing price war, sending up shares of both companies during regular trade on Thursday.
Uber shares fell 5% after hours on Thursday and Lyft dropped about half a percent. Uber had risen more than 8% and Lyft had gained 3% during the day.
Uber reported that revenue growth slowed to 14%, and the company's core business, ride-hailing, grew revenue only 2% to $2.3 billion. If not for a 72% rise in revenue from food delivery unit Uber Eats, revenue would have dropped. Total revenue fell short of the average analyst estimate of $3.36 billion, according to IBES data from Refinitiv.
Gross bookings, a measure of total value of car rides, scooter and bicycle trips, food deliveries and other services before payments to drivers, restaurants and other expenses, rose 31% from a year earlier to $15.76 billion. Analysts on average were expecting $15.80 billion.
At the same time, Uber is keeping less money per car ride. The amount passengers spent on trips rose 20% while the amount Uber kept after paying its drivers increased just 4%.
Chief Executive Officer Dara Khosrowshahi said in a press call the competitive environment is starting to rationalize and it has been "progressively improving" since the first quarter.
Lyft on Wednesday said pricing had become "more rational", meaning the company should spend less on promotions and incentives to win market share. It raised its revenue outlook on Wednesday.
Uber's Khosrowshahi said the company is making its decision separate from Lyft.
Both the companies have historically relied on subsidization to attract riders and have been spending heavily to expand services into areas such as self-driving technology for Lyft and food delivery for Uber.
Uber's costs rose 147% to $8.65 billion in the quarter, including a sharp rise in spending for research and development.
"While we will continue to invest aggressively in growth, we also want it to be healthy growth, and this quarter we made good progress in that direction," Chief Financial Officer Nelson Chai said in a statement.
The company, which has not yet made clear whether it will make a profit, is trying to convince investors that growth will come not only from its ride services, but also from other logistics and food delivery services.
Uber said its monthly active users rose to 99 million globally, from 93 million at the end of the first quarter and 76 million a year earlier.
source: news.abs-cbn.com
THE HAGUE, Netherlands - Ride-hailing operator Uber announced Monday it has launched in the Netherlands a new function that allows LGBT users to report if they have suffered discrimination.
The "report button" made its debut during the Gay Pride festival in Amsterdam, which attracts hundreds of thousands of visitors each year.
The Netherlands is the first country where the app's new function is available but it could be rolled out in other countries as well, a company spokesman said.
The move is part of measures promoted by taxi services to fight discrimination in Amsterdam, where members of the lesbian, gay, bisexual and transexual community accuse drivers of regularly rejecting them as passengers.
"When I want to take a taxi, they often refuse to take me as a passenger. And sometimes, when I am actually seated in a taxi, the driver doesn't want to speak to me," Jennifer Hopelazz, an Australian drag queen based in Amsterdam for nearly 30 years, said in a video posted on the Uber Netherlands website Monday.
The latest incident occurred in early July when an Uber driver refused to pick up Hopelazz.
"I feel angry, wounded and humiliated," Hopelazz said in the video.
In a statement, Uber vowed to "work hard to fight against this discrimination".
"Unfortunately there still exist some examples of intolerance and discrimination in the taxi business," the company said.
Depending on the seriousness of the allegations, Uber will respond to complaints by mail, instant message or a phone call, and a warning could be sent to drivers accused of discrimination.
In turn, drivers will also be able to use the new function to report complaints.
source: news.abs-cbn.com
Uber said Wednesday it plans to speed up restaurant meal delivery by using drones for its Uber Eats service, in the latest effort by the ride-hailing giant to disrupt the transport sector.
At its Uber Elevate Summit, the company said it had regulatory approval to begin tests of delivering food by drone in the region of San Diego, California.
"Our goal is to expand Uber Eats drone delivery so we can provide more options to more people at the tap of a button," said Luke Fischer, head of flight operations at Uber Elevate.
"We believe that Uber is uniquely positioned to take on this challenge as we're able to leverage the Uber Eats network of restaurant partners and delivery partners as well as the aviation experience and technology of Uber Elevate."
For logistical reasons, the drones will not deliver directly to customers, but to a safe drop-off location where an Uber Eats driver will complete the order.
In the future, Uber hopes to land the drones on parked vehicles located near each delivery location to allow the final delivery by hand.
Uber said it had developed a proprietary airspace management system called Elevate Cloud Systems that will guide the drones to their location.
While not the first food drone delivery service, Uber is aiming for a potentially large-scale service through its food service partners across the United States.
Initial testing in San Diego was done with McDonald's, and will be expanded to include additional Uber Eats restaurants later this year.
The drone service is part of Uber's move to the skies as it seeks to develop an aerial ride-sharing network tied in with its smartphone app to help people avoid traffic congestion on the ground.
Uber said the drone service will provide data that will help manage its air network, and eventually allow the aircraft to operate autonomously.
New autonomous car
Separately, Uber unveiled its newest self-driving vehicle produced by Volvo Cars.
The Volvo XC90 prototype will be "capable of fully driving itself," according to an Uber statement, with sensors atop and built into the vehicle to allow it to operate and maneuver in an urban environment.
"Working in close partnership with companies like Volvo is a key ingredient to effectively building a safe, scalable, self-driving fleet," said Eric Meyhofer, CEO of Uber Advanced Technologies Group.
Uber signed a deal in 2017 with Volvo, which is owned by China's Geely, to produce "tens of thousands" of self-driving cars for a fleet of autonomous taxis.
Volvo said it will use a similar autonomous base for the introduction of its first commercially available autonomous drive technology in the early 2020s.
This week, Uber CEO Dara Khosrowshahi said he does not expect fully self-driving vehicles to be deployed for at least 15 years, but that autonomous features will be gradually introduced and that some "easy" trips may be made autonomously.
Uber also unveiled the latest versions of its electric bikes and scooters that round out its shared transportation system.
source: news.abs-cbn.com
Uber said Thursday it is readying its first helicopter rides, which will carry passengers between New York's JFK Airport and lower Manhattan.
The news of the Uber Air debut was first reported by the New York Times, and confirmed by Uber chief executive Dara Khosrowshahi, who tweeted the article with the comment: "Point to point multimodal journey planning and booking = no stress transport to and from JFK."
The flights -- which last about eight minutes -- would begin July 9 with "dynamic pricing" expected to be around $200 to $225, with ground transportation included in the city and airport, Uber said.
The news confirms Uber's ambitions to move beyond city streets with its "aerial ridesharing" efforts coordinated through its Uber Elevate team.
"Uber Copter offers the first real demonstration of the Elevate experience," said Eric Allison, head of Uber Elevate.
The New York service will be offered to members of Uber's loyalty programs.
The flights will help gather data for a wide rollout of Uber air transportation in the coming years, according to Allison.
While other helicopter services are available to New York airports, Uber is touting this as a "seamless" solution that includes all ground transportation and which can be booked on its smartphone app.
Uber has previously announced plans for shared air transportation by 2023 between suburbs and cities, and potentially within cities in the United States and other countries.
It has been working with partners to develop "flying cars" or small, electric aircraft with vertical takeoff and landing (VTOL) capability.
California-based Uber, the largest of the global ride-sharing firms, made a rocky stock market debut last month, raising $8 billion at a valuation of some $82 billion. It shares slumped in the first days of trade and have only recently bounced back to their offering level.
Uber said it lost $1 billion in the first three months of 2019 on revenue of $3.1 billion.
source: news.abs-cbn.com
TORONTO -- Ride-hailing apps like those of Uber Technologies and Lyft Inc are expected to alter the state of car ownership towards subscription-based services and shared ownership, auto industry experts said at a conference on Wednesday.
At the annual Collision Conference in Toronto, speakers said ride-hailing apps are also set to play a role in testing automation for safety.
"Your phone will be your car," said Andre Haddad, CEO of Turo, a peer-to-peer car-sharing company that enables users to rent their cars out to others.
Haddad said that while car sales have never been higher globally, people are realizing that owning a vehicle is increasingly becoming unaffordable due to car payments, insurance, and parking.
"Many more are realizing they can share their car when they're not using it or rent it out to recover the big costs of ownership," he added.
Uber said it is the largest ride-hailing firm in the world with 91 million users globally and a 65 percent market share in North America.
Both Uber and Lyft went public this year, but are trading well below their offer prices.
Haddad said that car ownership among young adults was on the decline, with fewer adults under the age of 25 purchasing cars.
At the same time, he said the demographics would stabilize and demand for cars for events like weekend trips or vacations would maintain their interest.
Scott Hempy, CEO of Filld, a mobile gas delivery service, said labor trends like working remotely or from home had contributed to the reduced interest in cars, and that ride-sharing would change the insurance industry to per mile charges, rather than a flat fee.
Ride-sharing fleets and taxis are expected to be the testing ground for automation, according to Zaki Fasihuddin, the CEO of Volvo Cars Technology. Fasihuddin said ride-sharing cars would be the first practical applications for autonomous vehicles, at the ultimate goal of reducing all fatalities.
"Give consumers the choice," said Fasihuddin. "Ride-sharing is a viable option. Nowadays people take that for granted, and that's a valid mode of transportation.
source: news.abs-cbn.com
Last September, Uber’s top executives were pitched by some of Wall Street’s biggest banks, Morgan Stanley and Goldman Sachs.
The bankers’ presentations calculated Uber’s valuation almost identically, hovering around one particular number: $120 billion.
That was the figure the bankers said they could convince investors Uber was worth when it listed its shares on the stock market, according to three people with knowledge of the talks. Uber’s chief executive, Dara Khosrowshahi, and chief financial officer, Nelson Chai, listened and discussed the presentations, these people said. Then they hired Morgan Stanley as lead underwriter, along with Goldman Sachs and others, to take the company public — and to effectively make the $120 billion valuation a reality.
Nine months later, Uber is worth about half that figure. The ride-hailing firm went public last week at $45 a share and has since dropped to around $43, pegging Uber’s market capitalization at $72 billion — and officially crowning it as the stock market debut that lost more in dollar terms than any other American initial public offering since 1975.
How Uber’s offering turned into what some are now openly calling a “train wreck” began with the $120 billion number that the bankers floated. The figure leaked last year, whipping up a frenzy over how Uber could soon become the biggest American company to list on an American stock exchange — larger even than Facebook, which went public in 2012 at a whopping $104 billion valuation.
But for Khosrowshahi and Chai, the $120 billion number turned Uber’s IPO process into an exercise in managing expectations. Some large investors who already owned Uber shares at cheaper prices pushed back against buying more of the stock at such a lofty number, said people familiar with the matter. Their appetite for Uber was dampened further by the company’s deep losses and slowing growth in regions like Latin America. And Uber had to contend with unforeseen factors, including fraying trade talks with China that spooked the stock market in the same week that the company decided to go public.
The result has created a host of pointed questions for all involved in Uber’s IPO, from Khosrowshahi and Chai to the lead underwriters at Morgan Stanley, Goldman Sachs and Bank of America. While Uber raised $8.1 billion from its offering and reaped billions of dollars in returns for its early investors and founders, what should have been a climactic moment for a transportation colossus instead became an embarrassment.
The extent of the fallout may not be clear for a while, and it is too early to judge how Uber will ultimately fare in the public markets. But as many other tech-related companies aim to go public this year, including the food-delivery company Postmates and the real estate firm WeWork, they will have to contend with whether Uber has squelched what had been a red-hot IPO market.
“The $69 billion market cap Uber had when the market closed today is a new reality,” said Shawn Carolan, partner at Menlo Ventures, which invested early in the company. But he added that Uber’s executives now had “the opportunity to show us what they can do.”
This account of Uber’s IPO was based on interviews with a dozen people involved in or briefed on the process. Many asked to remain anonymous because they were not authorized to speak publicly. Representatives from Uber, Morgan Stanley and Goldman Sachs declined to comment.
For years, Uber was an investor darling. As a privately held company, it gorged on capital from venture capital firms like Benchmark and GV, mutual fund firms like Fidelity Investments, and companies like SoftBank. Its private valuation shot up from $60 million in 2011 to $76 billion by August 2018.
Khosrowshahi, who became CEO in late 2017, was recruited partly to steer Uber through a successful IPO. Uber’s board agreed to pay him $45 million in cash and restricted stock — and set an unusually specific valuation target for an additional bonus. In a provision in Khosrowshahi’s compensation agreement, which was revealed in the company’s IPO prospectus, the board said that if Uber was valued in the public market at $120 billion or more for at least three months in the next five years, he would receive a payout of $80 million to $100 million.
That provision set something of a goal for Uber, which the investment bankers who were hired to take the company public also gravitated toward. Within weeks of the banks’ presentations on the $120 billion, that number leaked, leading to giddy speculation in Silicon Valley and on Wall Street that Uber’s offering could usher in a golden era of wealth.
By December, Uber’s IPO team was set. At the company, Chai, a former CFO at Merrill Lynch, was charged with leading the public offering. At Morgan Stanley, Michael Grimes, the firm’s star tech banker, was the point person, assisted by Kate Claassen, head of internet banking. Goldman Sachs’ team was led by Gregg Lemkau, Kim Posnett and David Ludwig. Bank of America’s was headed by Neil Kell and Ric Spencer.
Almost immediately, the setbacks began, starting with Uber’s business. Its once-meteoric growth rate was slowing as its geographic expansion appeared to be running out of room and as competitors continued springing up across the world.
One growth headache was connected to Uber’s biggest investor, SoftBank. The Japanese company, which has a $100 billion Vision Fund that it uses to invest in all manner of companies, has poured capital into technology startups including Didi Chuxing, China’s biggest ride-hailing company, and 99, a transportation startup in Latin America.
In January 2018, Didi agreed to acquire 99. Both SoftBank and Didi also started directing funds toward pushing deeper into Latin America; SoftBank eventually created a $5 billion fund earmarked specifically for investing in Latin American companies.
For Uber, the timing was terrible. The region was one of its most promising growth areas and its competition had ramped up. By this February, the damage in Latin America had begun showing up in Uber’s results in the form of slowing growth.
Uber’s food delivery business, UberEats, was under attack as well. SoftBank had sunk hundreds of millions of dollars into DoorDash, a food delivery company in the United States. More recently, SoftBank invested $1 billion into Rappi, a food delivery company in Latin America. Uber had to spend more to battle those rivals.
SoftBank and Didi declined to comment. (Uber and Didi own shares in each other as well.)
LUKEWARM DEMAND
The slowing growth led to lukewarm investor demand for Uber’s shares, according to two of the people involved in the matter. Some investors argued that Uber needed to price its offering lower, these people said.
Some investors were also resisting because they had earlier invested in Uber at cheaper prices. Since its founding in 2009, Uber has taken in more than $10 billion from mutual fund firms, private equity investors and others, meaning that its stock was already widely held among those institutions that traditionally buy shares in an IPO. So the IPO essentially became an exercise in getting existing investors to buy more shares — a tough sell, especially at a higher price.
In March, another problem cropped up. Uber’s rival in North America, Lyft, went public and promptly fell below its offering price on its second day of trading. Investors appeared skeptical about whether Lyft could make money, setting a troublesome precedent for Uber.
By the time Uber made its IPO prospectus available in April, it had already told some existing investors that its offering could value it at up to $100 billion — down from the initial $120 billion.
Inside Uber, two people familiar with the deliberations said the company’s board was also not fully briefed on how Khosrowshahi and other executives planned to pitch the firm to investors in what is known as a “roadshow.” Only a smaller group of board members, who were part of a pricing committee — including Khosrowshahi; Ronald Sugar, who is also Uber’s chairman; and David Trujillo of TPG — focused on the IPO, these people said.
Another person close to the board said that all board members were invited to attend pricing discussions and IPO event planning, and that all materials from the pricing committee were made available. Some members were more active than others, the person said.
In late April, Uber proposed a price range of $44 to $50 a share for its offering, putting its valuation at $80 billion to $91 billion, below the $100 billion it had floated just a few weeks earlier.
The company soon hit other obstacles. President Donald Trump tweeted this month that he wanted to raise tariffs on $200 billion of Chinese goods, unsettling global stock markets. The day before Uber priced its IPO, Lyft reported a $1.14 billion loss for its first quarter, renewing questions about the health of ride-hailing businesses.
Uber’s executives, board and bankers discussed the final pricing of the stock sale on May 9. Several board members pushed for a price at the higher end of the $44- to $50-a-share range, said the people briefed on the situation.
But Morgan Stanley, Goldman Sachs and others agreed that it needed to be lower, they said. The list of orders from potential investors, known in Wall Street jargon as the “book,” showed that the most desirable investors — the big asset managers who were most likely to hold on to the shares, even in tough times — were interested only in the lower price.
The final price: $45 a share.
That evening, Khosrowshahi and his management team gathered in New York at Daniel, a Michelin star restaurant a few blocks east of Central Park, at a “pricing dinner” hosted by Morgan Stanley. The mood was upbeat, according to two people familiar with the evening.
But the next morning, that mood had changed. Uber executives arrived at the New York Stock Exchange, where the company was listing its shares. Before the first trade, monitors that lined the exchange floor displayed how Uber’s stock was likely to fall — flashing up $45, $44, before finally opening at $42. The chatter quieted.
The rest of the day was little better. Uber’s stock never rose close to its $45 offering price. As the so-called stabilization agent, charged with helping trading in Uber stock, Morgan Stanley made some moves to support the shares, according to people with knowledge of the matter. But by the end of the day, while the S&P 500 closed up, Uber’s stock remained down.
On Thursday, Uber closed at $43, more than 4% below its offering price.
2019 New York Times News Service
source: news.abs-cbn.com
Uber Technologies Inc's shares made a disappointing market debut on Friday, marking a rocky start for the most anticipated initial public offering of the year as other high-profile startups such as Slack and WeWork look to go public.
The fall in shares undermined Uber's strategy of pricing its oversubscribed IPO conservatively at $45 per share to avoid a repeat of rival Lyft Inc's stock market struggles following a strong debut in March.
The company's shares opened at $42 and fell as much as 9% to a low of $41.06 in early trading before recovering most of their losses to trade down 2.5% at $43.92 by 1805 GMT. Lyft was down 4%, well below its IPO price.
Uber's IPO comes against the backdrop of a spike in trade tensions between the United States and China that has weighed on financial markets and increased investor skepticism about its ability to turn profitable soon enough.
Chief Executive Dara Khosrowshahi, who was on the NYSE trading floor to mark the debut, tried to calm investors by pointing to the company's growth prospects and expansion plans.
"My reaction (to the share price) is if we build and build well, shareholders will be rewarded. We're certainly not measuring our success over a day, it really is over the years," Khosrowshahi said.
The IPO was a landmark moment for the decade-old company, which was started after its founders struggled to find a cab on a snowy night and grown into the world's largest ride-hailing company, making more than 10 billion trips.
Khosrowshahi was accompanied by a team of Uber officials at the NYSE to celebrate the start of the company's life as a listed entity. Co-founder and former CEO Travis Kalanick, who resigned in 2017 under pressure from investors, was also seen on the trading floor.
The company's road to IPO was marred by several hurdles including increased regulations in several countries and fights with its drivers over wages.
Uber has said that it has the potential to grow not just in the cab hailing business, but also as a "superapp" to provide a variety of logistic services, such as grocery and food delivery, organizing freight transportation, and even financial services, much like Grab, its Southeast Asian counterpart.
But market experts have struggled to find value in a company that has consistently posted losses, and warned that it may never actually be profitable.
"The business is unprofitable, new entrants can enter the market, there is potential regulatory risk, and it is very price sensitive. What is there to like about this opportunity?" Robert Johnson, professor of finance at Heider College of Business, Creighton University in Omaha, Nebraska said.
Uber's debut and its coming days of trading will be closely watched by other high profile startups looking to tap into public money, including flexible office space firm WeWork and workplace messaging app-owner Slack Technologies Inc. Both companies have confidentially filed for IPOs.
As a private company, Uber has raised more than $15 billion from investors to fuel its growth and expansion into food delivery and freight hauling, with little regard for turning a profit. Uber reported a loss of $3.03 billion in 2018 from operations.
"We are willing to give quite a bit of rope and leeway on current profitability if you can show how you're going to get there," said Jordan Stuart, a portfolio manager at Federated Kaufmann who often purchases companies' shares during an IPO.
As a public company, Uber will have to deal with quarterly earnings reports and demands from shareholders to plot a path to profitability.
The company weathered controversies including the unearthing of a culture of sexism and bullying at Uber and a U.S. Department of Justice investigation, which culminated in the resignation of Kalanick. Uber eventually hired Khosrowshahi to lead the company.
(Reporting by Aparajita Saxena and Joshua Franklin; Writing by Sweta Singh; Editing by Saumyadeb Chakrabarty)
source: news.abs-cbn.com
When Uber begins trading on Friday, it will cap one of the largest ever tech initial public offerings and join a crowd of big-name startups making their stock market debuts this year.
Not since the dot-com boom have so many richly valued tech companies gone public in such short succession: Shares of Lyft and Pinterest are now trading, and Slack, WeWork and Palantir are expected to follow soon.
But this crop of tech companies is markedly different from those that came up during the late 1990s.
Many rode the rise of mobile connectivity and cloud computing in the last decade to multibillion-dollar valuations. They are more mature, having spent years as private companies building their businesses. But a number remain deeply unprofitable, and the time they spent in the private markets, increasing in size and value, has ultimately raised questions about where they go from here.
By staying private for longer, tech startups have been able to avoid public scrutiny
When Netscape, Yahoo and Theglobe.com, a now-defunct online network of “virtual communities,” went public in the late 1990s, none had been around for more than three years. When Lyft began trading on the Nasdaq in late March, it had been in business for about seven, and it was young compared with others. Uber, PagerDuty and Pinterest have all been operating for at least a decade.
There are a number of explanations why companies are staying private for longer. Some point to increased regulation of public companies. Others note how record-low interest rates after the financial crisis pushed investors into private markets, increasing the amount of money available for funding rounds.
But by relying on venture capitalists and other investors to finance their operations, startups have had more runway to figure out sustainable business models while avoiding the public eye.
Today’s tech startups going public have built big businesses as private companies
Not surprisingly, the startups in this IPO wave are more valuable.
The average stock market valuation of the venture capital-backed tech companies going public in the United States this year is $9.6 billion, according to CB Insights, a company that tracks startups. Their combined value could exceed $150 billion by year’s end.
Lyft, which raised about $5 billion, went public with a valuation above $20 billion. Investors handed Uber even more — about $15 billion in all — and the company was valued at more than $82 billion when it priced its public offering on Thursday.
Amazon and Yahoo, by contrast, were worth less than $500 million at the time of their IPOs.
Much of the startups’ growth may be behind them
Investors have long made bets on companies that promise to revolutionize how people shop, travel and consume media. Two decades ago, many ignored the relative youth and financial outlook of the startups they were backing. For some, the bets paid off: Amazon, eBay and Google trace their roots to the dot-com boom. But the period also produced many high-profile flops like Webvan and Pets.com.
Unlike those busts, highly valued tech companies today are more established, and many of them are drawing billions in revenue. Still, not all seem like sure bets.
Sales growth for several of the startups appears to be slowing. Last year, for example, Uber’s revenue rose 42 percent from the year before; in 2017, revenue more than doubled from 2016.
By comparison, Netscape, Amazon, eBay and Yahoo combined generated less than $100 million in revenue when they went public. But they were on the upswing, and in the three years after their IPOs, their revenues surged by more than 10 times.
Slowing revenue growth doesn’t necessarily mean investors who buy in at the IPO price will miss out on big gains. Some investors worried about Facebook’s slowing revenue growth when it went public in May 2012. But three years after the debut, its revenue had tripled and its share price had more than doubled.
But the slowing growth of this new generation has raised questions about whether some of them will become profitable soon.
Being unprofitable is hardly a new phenomenon. Startups have often lost money as they go public, but the losses by some in the current group are particularly steep. Lyft lost nearly $1 billion last year, among the largest by a company in the year before it went public. And Lyft’s loss is not the largest of those planning IPOs. WeWork lost $1.9 billion last year, and Uber lost $1.1 billion in the first quarter alone.
Today, regardless of their profitability and with less need to raise cash, many of these companies are going public largely to provide their founders, early investors and employees an opportunity to cash in at what are already very rich valuations.
Those shareholders who got in early stand to reap a windfall. Whether further big gains will continue to materialize for those buying shares in the public markets remains a question.
2019 New York Times News Service
source: news.abs-cbn.com
A day of strikes planned by Uber drivers in cities around the world drew a modest turnout Wednesday, as protesters denounced the ride-hailing giant’s employment and pay practices before its blockbuster initial public offering this week.
In Britain, some drivers, joined by members of other unions, protested at Uber offices around the country. About two dozen protesters outside the British headquarters in East London banged drums; released a smoke flare; displayed banners that read, “Uber sell off: Billions to bosses, poverty pay for drivers”; and chanted, “Uber, Uber, you can’t hide, we can see your greedy side.”
In San Francisco, hundreds of protesters blocked the street in front of Uber’s headquarters as a brass band played. They carried signs that said Uber and Lyft, its primary rival in the United States, which went public in March, were “launching IPOs on the backs of their drivers.”
And outside Uber’s New York City headquarters in Queens, about 50 drivers and their supporters protested their wages and some of the employment practices of ride-hailing companies, chanting: “Driver power! Union power!” They said they felt they were being treated unfairly by companies that they had helped turn into transportation Goliaths.
“We invest in this company,” said Georges Colois, an Uber driver for more than two years in New York, pointing to the costs of renting or buying a car and paying for its upkeep and fuel, all to the benefit of the ride-hailing companies.
“I believe we deserve some respect and to be paid fairly,” he said.
The strikes were one of the biggest coordinated efforts by drivers to demonstrate their grievances against Uber and Lyft, organizers and drivers said. The protests garnered support from several candidates for the Democratic presidential nomination, including Sens. Bernie Sanders of Vermont, Elizabeth Warren of Massachusetts and Kamala Harris of California.
But the strikes were largely muted. At La Guardia Airport in New York on Wednesday morning, cars driving for Uber and Lyft picked up passengers, and one airport worker said the flow of for-hire cars was typical for the time of day. Most drivers interviewed said they were either unaware of the strike or unable to participate because they needed to earn money.
At the heart of the drivers’ frustration is their status as independent contractors, not full-time workers. Ride-hailing companies argue that drivers prefer the flexible schedule of a freelancer. But drivers lack full-time benefits like health care and have said they have little control over their wages because the companies set the fares and take a cut of the fees they earn from rides.
In Melbourne, Australia, about 30 protesters gathered near an Uber facility, holding signs that said, “On-demand workers demand a living wage,” and chanting: “Uber, Uber, you must listen. We will break your algorithm!” Their complaints included falling pay, long hours and a lack of sick leave.
The strikes were timed right before Uber’s public offering, with the company set to start trading its shares on the stock market Friday. Uber is the biggest of a generation of technology startups that base their businesses on smartphones and use gig workers. The company is expected to be valued at more than $80 billion in its IPO, and its founders and investors are set to reap billions of dollars in wealth.
But that windfall will largely skip the drivers. Although Uber has said it intends to award cash bonuses to more than 1.1 million drivers — with those in the United States having the option to buy the company’s stock in the IPO — drivers have called that a fig leaf. They said the wealth being gained by top executives and private investors had prompted the action Wednesday.
Mostafa Maklad, a driver in San Francisco who worked with the group Gig Workers Rising to help organize the protest, said he had received an IPO bonus of about $500 from Uber after driving for four years.
“They are just throwing us crumbs from how much money they will make,” he said.
Annette Rivero, who drives for Uber and Lyft in San Francisco, said she had recently struggled to keep up with her rent and bills as the ride-hailing companies cut back on incentive bonuses.
“I’m out until 4 a.m. trying to make money to pay my phone bill the next day,” she said.
In Chicago, a group of drivers called Chicago Rideshare Advocates has put forth a legislative wish list that includes pay-rate increases, a cap on the number of ride-hailing vehicles in the city and an independent way for drivers to appeal suspensions or banishment, known as deactivation.
Eli Solomon Martin, a founder of the group, said seemingly arbitrary deactivations were among the most frustrating aspects of work as a driver.
“If you haven’t had an unfair deactivation, you know someone who has,” Martin said.
More than 3 million people drive for Uber globally and have earned $78.2 billion from the service since 2015, the company said in a recent regulatory filing. In a statement Tuesday, Uber said, “Drivers are at the heart of our service ─ we can’t succeed without them ─ and thousands of people come into work at Uber every day focused on how to make their experience better, on and off the road.”
Lyft said in a statement, also Tuesday, that driver earnings had increased over the last two years.
“We know that access to flexible, extra income makes a big difference for millions of people, and we’re constantly working to improve how we can best serve our driver community,” a spokesman said.
2019 New York Times News Service
source: news.abs-cbn.com
SAN FRANCISCO/BENGALURU -- Ride services company Lyft Inc forecast that its losses would peak this year as it controlled expenses and got more revenue from each customer, posting a $1.1 billion quarterly loss on Tuesday, days ahead of rival Uber's IPO.
"We are encouraged by our strength of our core business and see a clear path to profitability in ride sharing," said Chief Financial Officer Brian Roberts, sparking a short-lived bump in shares.
Lyft promised profit in ride-hailing services without giving any timeline, but it previously had warned regulators it may never make money overall as it invests heavily in self-driving cars, renting scooters and other ventures.
As ferocious growth slows at Lyft and Uber Technologies Inc , investors are paying more attention to what the companies need to do to make a profit.
Investors appeared uncertain how to interpret the company's performance, with shares moving up and down after the bell. Since Lyft's IPO on March 29, shares had fallen 23 percent.
The report, Lyft's first as a public company, showed revenue nearly doubled for the quarter ended in March but forecast that growth would slow to 52 percent to 53 percent for the full year. Lyft is watched as a bellwether for Uber, which will price its offering on Thursday.
Lyft said it was getting more revenue per customer, reducing incentives and boosting margins, although investments in areas such as self-driving, scooters and bikes were masking improvements in its core business.
New technology to match drivers and riders, and higher-priced rides in luxury vehicles were helping boost margins, it said. Lyft said its adjusted EBITDA margin improved to negative 28 percent from negative 60 percent a year ago.
The company, which says it has nearly 40 percent of the US ride-hailing market, said increased demand helped push revenue to $776 million in the quarter, above analysts' average estimate of $739.4 million, according to IBES data from Refinitiv.
A second-quarter revenue forecast of $800 million to $810 million was ahead of analysts' expectations of $783.1 million. The low end would amount to a revenue increase of 58 percent, however, far short of the growth Lyft has enjoyed recently.
Last year's second-quarter revenue got a boost from a price hike, making this year's comparison more challenging, Lyft said.
Atlantic Equities analyst James Cordwell called the results "pretty strong," with hints that Lyft was continuing to take market share from Uber. He cautioned, however, that Lyft's outlook did suggest "a meaningful slowdown in revenue."
"The question will be whether this is just conservatism, Uber starting to fight back, or the company hitting tougher comps," Cordwell added.
In a snub to Uber, Lyft also announced a partnership with Alphabet Inc's Waymo in which Lyft will deploy 10 self-driving vehicles around the Arizona city of Phoenix by the third quarter. Uber has welcomed Waymo cars on its network but has not signed any deals.
For its second quarter, Lyft forecast an expected adjusted EBITDA loss of $270 million to $280 million.
Lyft posted revenue of $37.86 from each of its 20.5 million active riders during the first quarter, a 34 percent increase in revenue and a 46 percent increase in riders over the same period in 2018.
A net loss widened to $1.14 billion, or $48.53 per share, in the first quarter ended March 31 from $234.3 million, or $11.69 per share, a year earlier. Stock-based compensation and payroll tax made up $894 million of that amount.
Last year, Lyft had 30.7 million riders and 1.9 million drivers in more than 300 cities in the United States and Canada. In comparison, Uber - which could be valued at about $90 billion - had 75 million riders and 3.9 million drivers in 65 countries.
source: news.abs-cbn.com
