Uber's massive $68.5 billion valuation is now in question as some investors started pondering the company's ability to actually make money going forward, The Information reported Thursday, citing people close to the San Francisco, California-based firm. The ride-hailing service provider seized the title of the world's most valuable startup following its last private financing round in 2015, albeit SoftBank's recent tender offer values it at no more than $48 billion, 30 percent down the previous figure. While not all shareholders are convinced that $33 per share is a fair price for Uber, a number of them are said to be skeptical about the company's long-term prospects and have already signaled their intentions to sell their stakes to the Japanese suitor.
Apart from suggesting the largest private stock sale in the history of trading, SoftBank's offer is unique in that it comes less than two years before Uber's initial public offering. With some of the firm's largest and oldest investors being prepared to at least partially cash out on the bid despite Uber explicitly stating it's going public in 2019, many questions are now being raised about the company's true worth; if all investors really valued Uber at north of $48 billion, they wouldn't be selling off their stakes so close to an IPO that would allow them to generate significantly higher profits. While SoftBank already pledged to inject an additional $1 billion into the ride-hailing firm based on its previous valuation, that figure is dwarfed by approximately $10 billion it would commit to purchasing heavily discounted shares.
Investors are said to be skeptical about Uber's ability to make money as they fear the potential of the global ride-hailing market has previously been overstated and any related profits may not be as high as some have projected once companies like Uber, Lyft, and Didi Chuxing stop subsidizing rides. At the same time, more affordable ride-sharing alternatives like UberPool are expected to be even less profitable and can hardly serve to back any eleven-digit valuation figure, some investors believe. Ultimately, Uber's questionable valuation largely comes down to company's previous predictions related to its profitability. Two years ago, the startup claimed its net income from developed markets such as the United States will amount to hundreds of millions of dollars in 2017, yet it's now expected to post a loss larger than $4 billion for the current fiscal year. In overall, while Uber's IPO is coming in 2019, its road to one is likely going to be a rough one.