Uber Technologies Inc might be up for sale and you can buy a piece of the company – if you have a net worth of $100M and you can afford to make a minimum investment of $1M. If you’ve been waiting to invest in Uber, this is your chance. Uber is a company that connects passenger to drivers in minutes by making it easy for people to get a taxi, private car, or rideshare from an app on a mobile device. Uber is currently valued at $62.5B as it continues to expand its offerings, grow into new service base, and expand into new markets globally.
Uber sells shares without going public
Uber has obtained a $62.5B valuation because of its success at each funding round and investors line up to put money down for the firm. Now, Uber is taking its fund raising moves to the next level as it starts to sell stakes to retail investors even though it hasn’t done an IPO. CNBC reports that Uber might be years away from an IPO but it is already offering retail investors a chance to buy through brokerage firms.
It was reported that high-net worth individuals who have accounts with Morgan Stanley and Merrill Lynch might have an opportunity to invest in Uber Stock. Uber wants to raise $2.1B in capital and it has gotten about $1B from institutional investors in Dec. 2015. Now, retail investors will provide the rest of that $2.1B capital needs. Uber had made a similar offer to retail investors in early 2015, when it sold $1.6B in convertible debt to Goldman Sach’s high net worth group.
There’s a catch though, if you have a brokerage account with Merrill Lynch you need to be in the top one percentile before you can buy Uber stock – you’ll need to have a net worth of $100M and you must be ready for a $1M minimum investment. Folks who have brokerage accounts with Morgan Stanley might find it easier to qualify for a chance to buy Uber stock – Morgan Stanley requires potential Uber investors to have a net worth of $10M and a minimum investment amount of $250,000.
Uber gets $2B from Chinese investors
In other news, Reuters reports that Uber has collected almost $2B in funding from Chinese investors to value its Chinese units at $7B. The fundraising from Chinese investors shows that the firm is attractive to investors within and outside the U.S. Uber has not gone public with an IPO but the high interest it gets from high net worth individual investors suggests that the firm might have a great IPO story.
Uber might turn out to be a bull… or a bear
Uber’s ability to attract high valuations has been deeply polarizing in the investment scene. For instance, top tech firms are trying to provide rival Uber services or buy into Uber – to suggest that the firm might actually be the next big thing in tech.
Last year, Microsoft Corporation bought into Uber after it has missed the self-driving car wave in the tech space. Last month, Alphabet Inc revealed that it Google Auto unit might launch a ride-hailing service that will rival Uber soon. Uber also tries to challenge the big names in tech – in fact, it seems that Uber has developed a penchant for poaching key talent away from bigger tech firms such as Alphabet.
Some people are worried that a $62.5B valuation might be too high for a firm that has nothing more than an app for connecting drivers with passengers. Uber’s $62.5B valuation more than doubles Tesla’s $27.5B market cap; yet, Tesla at least have “real” products and it has cars on the road. In contrast, Uber doesn’t own the cars in its fleet, and one is left to wonder what exactly the plans to do with all the money it raises. In Nov 2015, Clayton Christensen, father of disruption theory has said that Uber doesn’t carry the essence of a disruptive firm.
Some sell-side analysts think that a dotcom bubble 2.0 is in the offing, and this kind of sky-high valuation makes the tech space appear bloated and ready for a crash. Lyft offers a rival service to Uber and it has a modest valuation of $4B as at Nov. 2015. Hence, Uber’s $62.5B valuation doesn’t really make much sense on the surface.
However, Uber, the banks, brokerage firms, and the top one-percentile investors might know something that the rest of us don’t know. We will wait and see the wisdom (or not) in a $62.5B taxi business that hasn’t IPOed.