Uber's Big Day, Brexit's Big Delay

Uber's Big Day, Brexit's Big Delay

Two stories today!

Expectations for Uber's S-1

On Wednesday, April 11th (yesterday), Uber announced that it was aiming for an IPO valued at around $100 billion, while at the same time Lyft shares closed at $60.12, an all-time low, 16% lower than its IPO price of $72. 

The shadow of Lyft's failure looms over Uber's IPO. The poor performance of $LYFT has implications for Uber's IPO. The obvious one is that $100 billion valuation figure — it's down from a $120 billion figure that was floated a few months ago. That's a pretty big difference: $20 billion. It seems like Lyft, which is probably the only reasonable publicly traded comparable company for Uber, has lowered expectations for ridesharing IPOs. Uber most certainly does not want to suffer such a nosedive, and so it has accordingly hedged against that risk by seeking a lower valuation. But at the same time, it could be the other way around. It is quite possible that Uber's incoming IPO introduces new, fierce competition into the public markets and as a result, Lyft's share price took a dive. Or both. Definitely both.

What this also means is that we can expect to see a few themes in Uber's S-1 required SEC filing prior to its IPO, which will be released a few hours after this article is posted. Uber will want to distance itself as far as possible from the suffering Lyft stock. It'll seek to differentiate itself and highlight all the ways it is better than Lyft — subtly of course. Look for Uber's S-1 to focus on three main things, all of which Lyft lacks:

1. A path to profitability 
• Uber generates 5.5x as much revenue as Lyft, $11bn compared to $2bn — though it also loses more money.
• Any paths to profitability in ridesharing involve autonomous vehicles. Not sure what Uber has up its sleeve here.
2. International dominance in addition to US domestic market dominance
• Look for Uber to highlight it's recent acquisition of Careem.
• Lyft essentially only meaningfully operates in the US. I personally experienced this lack of Lyfts internationally when I was in London a few weeks ago.
3. Profitable and promising side businesses such as UberEats and UberCard 
• Side note: UberCard has quickly become my favorite credit card.

Yet Another Brexit Blog — MPs Suck

Here's the headline: "Brexit: UK and EU agree delay to 31 October." My first reaction upon reading it was disbelief. Then disappointment. Brexit was supposed to happen on March 29th. October 31st is more than 7 months after that. Can you imagine if someone promises you to do something by March 29th, and then tells you he/she needs 7 more months to do it at the very least? In any other situation, this would be unacceptable behavior. If this were the private sector, Theresa May and the entire Conservative Party would be fired. Contrast this to, say, the investment banking industry. When a deal needs to be done, bankers spend 100+ hours a week in the office, weekdays and weekends until 3 or 4am in the morning, until they get that deal done. That's called dedication, work ethic, and grit. That's how you get results.

Let's contrast this with what the House of Commons has been doing. Here's a situation that is many magnitudes greater in importance than some financial transaction. This is the future of one of the top economies of the world. With such high stakes at play, an investment banking team would probably stop at nothing to get the deal done. However, let's see what the House of Commons was up to in January:

When they had 32 days until the official Brexit deadline, they literally took 10 days off for "Recess." And here were there working hours: Monday: 14:30 - 22:30, Tuesday: 11:30 - 19:30, Wednesday: 11:30 - 19:30, Thursday: 09:30 - 17:30, Friday (if sitting): 09:30 - 15:00. With one of the most important decisions in the UK's history, the MPs are strolling into work around noon and going home after a normal 8 hour workday. Friday's are even accompanied with an "if" regarding whether or not they would go to work.

I'm not even British, and I'm already riled up about this. With the new deadline on October 31st, at this point I wouldn't even be surprised if they just threw a Halloween Party and called it a day.

Side Note: No-Deal is functionally nonexistent, it seems.