Uber sees value in multiple business lines that take advantage of its technology, insights, and brand. But Uber Eats is a big business on its own by any measurement.
— Jason Clampet
An Uber initial public offering in 2019 could be worth as much $120 billion according to valuation proposals created by Goldman Sachs Group, Inc and Morgan Stanley, the Wall Street Journal is reporting.
The banks have not been hired to underwrite the IPO, but are positioning themselves to do so. According to the Journal “The valuations hinge in part on highlighting the potential of Uber’s businesses outside its ride-hailing app, some of the people said.”
The Uber Eats portion of the business is valued at $20 billion. This is in line with revenues for the business line, which CEO Dara Khosrowshahi said was one sixth of the entire company’s revenue.
“It’s the largest food delivery platform in the world outside of China,” Uber chief operating officer Barney Harford told Skift Table at the Skift Global Forum in September. “And the team has been doing this for less than three years. The growth that they have achieved, it’s been super exciting to see.”
Restaurant delivery rival Grubhub currently has a market cap of just over $10 billion, while Just Eat’s cap is $5.6 billion. Deliveroo was valued at $2 billion when it raised funds last fall.
Speaking at Skift Tech Forum earlier this year, Uber Eats boss Jason Droege stressed the importance of the non-taxi qualities of Uber. “We have a global operations organization that can roll out businesses very quickly when we have a product that works,” Droege said.
While Uber Eats is strong in urban areas, its exclusive partnership with McDonald’s in the United States has allowed it to quickly expand to multiple markets. Where delivery service is offered, it now accounts for ten percent of revenues for the chain.
When SoftBank invested in Uber in a December 2017 down round, it forced the company to sell some businesses in highly competitive areas, including southeast Asia. But expansion is still in the cards. Bloomberg reported in September that Uber was eyeing a Deliveroo buy to remove competition in the UK.
“We want to keep [the Uber Eats team] super focused on growth because the growth rates are incredible,” Harford said.
The looming shadow over all of Uber’s finanaces is its relationship with its Saudi Arabia-backed investor SoftBank. This week Khosrowshahi pulled out of a Davos-style conference in Riyadh, Saudi Arabia following what appears to be a state-sanctioned murder of a dissident journalist at the Saudi embassy in Istanbul, Turkey.