How To Invest In UBER Before It Goes Public

Published date: 03/02/2019
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Everyone seems to have used Uber or at least heard of the convenient service, making it a lucrative service to hold shares in. With the company looking to go public in a few months, many are wondering how they can invest in Uber and benefit from the organisation going public. This article will demonstrate an easy way to invest in the brand and benefit from the brand going public.

Investors are very excited by the prospect of an initial public offering (IPO) for the ride serving apps Uber and Lyft. Uber was valued at $72 billion last August, and Investment bankers are reported to have proposed a $120 billion IPO valuation. The Valuation comes at amazement to some as Uber actually posted losses of $1.07 billion in the final quarter of 2018.  

Uber and Lyft are actually referred to as “Disruption firms”. The definition of which is a company who revolutionise an industry and a way a service may be delivered to a consumer. Uber has been disrupting the transportation industry, first taking on black cars and taxis and now challenging private shuttles, buses, subways and food delivery. A few examples of other disruption firms are Airbnb for the Hotel industry, Just Eat and Deliveroo for the Takeaway industry. These firms are fairly Young and are part of a wildly expanding industry.

Conventionally only preferential wealth funds and certified investors would have the opportunity to participate and profit from the potential IPO we may see later in 2019. However, many ordinary Investors can actually profit from this offering.

INDIRECT APPROACH

By taking an Indirect approach to the potential IPO Investors could achieve substantial gains by investing in a publicly traded corporation that possesses a generous stake of Uber private stock. The Major Investors are stated below:

  • Microsoft Corporation (MSFT)invested $137 million in Uber back in 2015.
  • Alphabet Inc. (GOOG) Google invested $250 million in Uber in 2013.
  • Softbank (SFTBY) the Japanese venture fund became Uber’s biggest investor last December when it snapped up a 15% stake in the company for a funding round of $7 billion. 

 These Multi-national Corporations make up an enormous share of Uber’s private stock. 

An Increase in Uber’s stock will appreciate these firms’ stock prices. The reason being is there will be a positive correlation between Uber’s share prices and these firms share prices.  A rise in Uber's stock price will be reflected in each of these firm’s balance sheets and could help each of the firms realise substantial profits once Uber's IPO is released. 

 

To buy shares in the firms mentioned above simply follow the steps below.

Step 1: Setup a Brokerage Account

In order to make any transaction in the stock market, you’ll need to set up an account with an online or local stockbroker. Many Brokers offer a variety of products. Choosing the right broker requires research into the fees and products available as well as any preferences on service and support.

They’ll require the following in order to set up an account:

  1. Basic information, including name and address
  2. Personal investing experience, as well as social security number information.

Step 2: Fund Account

The next step would be to fund the Account. Please follow risk management strategically and never invest more than you can afford to lose

Step 3: Transact

 Monitoring the investment is key and having a goal set in terms of price when you would like to sell the stocks.

Step 4: Close position

Once your price goal has been achieved always close out. You may want to keep these stocks for the next 5 to 10 years. You can also always partially sell off a portion of your investment if sentiment and fundamental news around the corporations are giving a bullish bias.

 

Following the procedure above you will be able to buy shares in GOOG and MSFT which shares are currently quoted at 1,080.84 USD and 106.03 USD respectively. Both can be brought on the NASDAQ exchange.

Softbank (SFTBY) is available on the London and Tokyo stock exchange and is currently quoted at 8,138 JPY. 

An excellent previous illustration of this was in 2014 when Yahoo Inc (YHOO) was a very sizeable investor in the colossal Chinese e-commerce Alibaba Group Holding Ltd (BABA). In 2005 Yahoo co-founder Jerry Yang led Yahoo's negotiations to buy a 40% stake in Jack Ma's Chinese e-commerce company, Alibaba, for $1 billion. That stake is now estimated at an astonishing worth of over $76 billion. 

To this date, there is a degree of correlation between the two stocks. As Alibaba stock appreciates or depresses during a trading session, Yahoo stock frequently follows suit. We could see a matching positive correlation occur between Uber's Post IPO share price and one of the heavily invested firms such as Softbank share price.

Uber as a firm may face some hurdles before their proposed IPO. This week a fare increase is set to hit Uber riders in London. Given amid concerns of economic turmoil and an upcoming recession within the next 18 months this could decrease consumer spending heavily and global demand. With a firm like Uber providing many services considered as potential convenient “luxuries” such as Takeaways. The Ride hailing corporation could see its Profits affected and a possible delay in an IPO. Furthermore, Uber has come under further scrutiny and potential legal threat by its 160,000 drivers working for them. Uber classifies these drivers as contractors over employees therefore many drivers are left deprived by a lack of social security, Medical care and paid holidays.

 

COMPETITIVE APPROACH

Such points may give an Investor a bearish view on the potential IPO and may revert to a competitive approach in terms of Investing into a company whose stock may rise in light of Uber’s post IPO stock falling. A potential Outlook could be Medallion Financial Corp (MFIN)A Firm who is a speciality finance company that transcribes and services loans for taxicab medallions in major U.S. markets such as New York City. As demand for Uber services may fall, a likely increase in traditional substitutes is Prominent to occur. Consequently, a company such as Medallion Financial Corp (MFIN) stock would likely appreciate due to the negative correlation between the two firms.

Despite Concerns and bearish investors approach detailed above. Many Investors have faith in Uber’s IPO and remain bullish on the matter. Considering the growth and achievement in a relatively short space of time. Furthermore, with the firm being so Innovative and adaptable to change along the way, Bullish Investors have many reasons to be excited for potentially the largest IPO in history. There is ominous speculation of driverless cars hitting the roads of the world in the next 5 years. Uber is set to be a market leader in advocating and implementing this change to society which will revolutionise the transportation industry completely. Ultimately this will Skyrocket Uber’s Post IPO shares with UBER then having the potential to join the short list of Trillion-dollar companies in a span of a decade.

A Bullish Investor could also take a competitive approach by short selling the Medallion Financial Corp (MFIN) stock. Of which over the past 52 weeks has plummeted austerely. 

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Comments

  • How To Invest In UBER Before It Goes Public
    Kamaljit Singh says:
    05/02/2019

    Great insight!! I keep reading this

  • How To Invest In UBER Before It Goes Public
    Jose Petre says:
    05/02/2019

    WOW! we need more from this analyst! This article is insane

  • How To Invest In UBER Before It Goes Public
    Louise russell says:
    04/02/2019

    For the amount of ubers I catch it's about time i saw some money back, you guys rock :D

  • How To Invest In UBER Before It Goes Public
    Natasha Rogers says:
    04/02/2019

    I'm so intrigued... how can i speak to someone about this...

  • How To Invest In UBER Before It Goes Public
    Ryan Woodhouse says:
    04/02/2019

    I think you guys should have a subscription for articles, I would love just fundamental updates with notifications. Cant complain its free though :P :)

  • How To Invest In UBER Before It Goes Public
    Brandon Hartley says:
    04/02/2019

    Fire fire article, I'm getting in now and will hit you guys with some profit

  • How To Invest In UBER Before It Goes Public
    Stuart Dawson says:
    04/02/2019

    Who wrote this?? Tag there instagram/twitter, i wanna follow em mayn

  • How To Invest In UBER Before It Goes Public
    Kurisaodsi Emenkwea says:
    04/02/2019

    Damn i didn't know such steps, i woul'dve been lost for days. Appreciated

  • How To Invest In UBER Before It Goes Public
    Jose Alberto says:
    04/02/2019

    Sooo insiteful just what i neded

  • How To Invest In UBER Before It Goes Public
    James Mcnally says:
    04/02/2019

    WOOWW JUST WOWW

  • How To Invest In UBER Before It Goes Public
    Isa says:
    04/02/2019

    Thanks for the article guys!

  • How To Invest In UBER Before It Goes Public
    Liam says:
    03/02/2019

    Great insight and interesting speculations on potential pros and cons. Thanks for the article!

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