Uber will price its shares after US markets close on Thursday. It’s the final step before the company’s highly anticipated Wall Street debut on Friday.
The tech company is expected to price shares in the middle of its range, set between $44 and $50 per share, or even below, according to the Wall Street Journal. It’s shaping up as the largest tech IPO of the year.
Uber has a tough set of factors to consider when it comes to pricing. Market volatility has shot up, while shares in its competitor Lyft have declined following an IPO in late March.
The IPO comes as executives at Uber are working hard to design a future where the company earns billions of dollars by allowing riders to summon fully automated robotaxis.
Until then, they must rely on an army of human drivers — nearly 4 million across the globe — to keep the business humming. The challenge is to figure out how to make their drivers happy while also making money, and right now the company is losing on both fronts as it heads into its initial public offering on Friday — the largest technology IPO of the year.
Drivers complain about low wages and being classified as contract workers instead of employees, which cuts them off from the benefits that go with it.
Lyft, which beat Uber to the public market last month, is dealing with similar issues. On Wednesday, drivers for both companies participated in strikes across the country, pledging to turn off their apps for hours to call attention to their plight, although it’s unclear how many actually took part and the impact on customers appeared minimal.
“The drivers are the one who helped Uber to be $100 billion, nobody else, and the drivers are the ones who are suffering,” said Inder Parmar, 54, an Uber driver who lives in a suburb of New York City. “Uber and Lyft, they figured out how to exploit the drivers, and that’s what they’re doing right now.”
Uber is being challenged around the globe to treat its drivers as employees instead of contractors. Fighting those battles is expensive. What’s more, losing those battles and being forced to classify drivers as employees would exacerbate its financial difficulties.
“That would be the nightmare scenario,” said Dan Ives, managing director of equity research at Wedbush Securities. “That continues to probably be the biggest threat to the business models.”
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Although both Uber and Lyft have been growing at impressive rates, they have also been consistently losing money. Lyft, with its 1.1 million drivers and 18.6 million active riders in more than 300 markets in the U.S. and Canada, lost nearly $3 billion since its 2012 inception. Uber, which boasts 3.9 million drivers for its ride-hailing and food delivery services in more than 700 cities and 63 countries worldwide, lost nearly $8 billion over a decade.
By continuing to treat drivers as independent contractors, Uber and Lyft avoid paying for health insurance, overtime or benefits such as workers compensation, said Shannon Liss-Riordan, partner at Lichten & Liss-Riordan, who has represented drivers in the employment classification cases.
