The ride-sharing giant Uber is now officially on the way to going public. The new CEO, Dara Khosrowshahi, wears the engineering cap. Despite the controversy over recent years, the San Francisco based company plans to take the step in the second half of next year.
In an interview with CNBC, Khosrowshahi said Uber was "on track" in 2019 for its IPO news agency also reported that the company is still starting talks with banks, a big step on the road to a corporate coming-out party.
"We are in a good position in terms of profitability in terms of the company's profile and margins are getting better," he told the outlet, later repeating the news on the stage of the Recode Code Conference late Wednesday night , At this event, the CEO said Uber wanted to be the "Amazon for transportation".
So we're going to IPO Land. Here are a few things to know:
What is an IPO?
An "IPO" is a lot, but first it is a kind of public offer launched on a stock market in which a company for the first time issues shares to institutional investors and, in most cases, to retail or individual investors sold. It's also an important corporate rite, published by a private company that now, through law and regulation, has to share many of the business interests that were previously kept secret by its founders and executives.
What? actually happens during an IPO?
An IPO is acquired by one or more Investment Banks and these companies elaborate all the fine details associated with the listing of Shares in one or more stock exchanges around the world. This underwriting process, known as "floating," removes the outlines of a company and allows its managers to raise new money or equity to develop its products and expand its services.
What does that mean for the banks?
For the investment bank or the banks hired by the company to take them to the Sweet 1
Which tires does a company have to jump? until the IPO?
To go public, a private company must first obtain the necessary approvals from the US Securities and Exchange Commission by submitting an "S-1 Document." A guide for the uninitiated to understand exactly what that means Business does and why.
What does an S-1 look like?
Here's the opening part of Facebook's S-1, submitted in 2012: "Our mission is to make the world more open and connected, people use Facebook to connect with their friends and family to discover what's happening in the world around them, and to let them know what's important to them, developers can use the Facebook platform to create applications (apps) and sites that integrate with Facebook reach our global network of users and develop personalized, social and engaging products.
"Advertisers can interact with more than 800 million active users per month (MAU) on Facebook or subscribing to our users based on information they've communicated to us have, such as age, location, gender or interests. We offer advertisers a unique combination of reach, relevance, social context, and engagement to increase the value of their ads. We believe that we are at the forefront of enabling faster, easier, and more inclusive communication between people, and that Facebook has become an integral part of the daily lives of many of our users. We have seen rapid growth in the number of users and their engagement. "
Why should a company go public if it means opening up to the whole world?
Money! The IPO will make it much easier for a company to raise capital And it can do both through debt and equity: when it starts to sell pieces of itself (stocks) to the public, it attracts money to reinforce itself and compete with other companies Since public companies have to meet the strict reporting requirements set by various agencies, they gain credibility among investors because everyone knows what a company really intends to do, which in turn allows a public company to "borrow" by providing bank loans, personal loans Borrowing and credit lines to finance their business.
How much new regulation a company will have it as soon as it goes public
A lot. Public companies have thousands of shareholders and are subject to strict rules and regulations, as Investopedia emphasizes. "You need to form a board of directors and provide auditable financial and accounting information on a quarterly basis, public companies in the US report to the Securities and Exchange Commission (SEC), and in other countries, public companies are supervised by boards similar to the SEC listed companies comply with regulations and requirements set by the exchanges on which their shares are listed. "
Finally, IPOs are a good investment for the everyday investor?
Maybe yes, maybe not. The shares of some companies rise on the opening day, while others go in the other direction. Motley Fool puts it this way: "Although IPOs can be good for the companies behind them, they are not always good for investors – especially for inexperienced ones – although investing in IPOs can be profitable, it's usually a lot riskier perspective than investing in established companies with solid performance
"There are certainly exceptions," the report says, "IPO stocks tend to underperform years after being issued compared to the general market. That's because the companies behind them tend to focus on building business rather than on attracting investors. Anyone who is inclined to invest in IPOs should therefore take the time to carefully check the issuing companies before proceeding. "
So invest with care!