Will Rideshare Services Go Public in 2017
Rideshare services such as Uber Technologies Inc. and Lyft have been rumored to be going public for years. Investors and employees at Uber have been anticipating the IPO but they may be waiting in vain. Although there are daily articles predicting that 2017 is the year for Uber to go public, the CEO of Uber Travis Kalanick has publically stated that he wants to push the initial public offering back as far as he can. The company is valued at around $68 billion dollars but has shown no interest in taking their shares public.
There are many employees at Uber that are multi-millionaires on paper but without an initial public offering and strict policies blocking them from selling their private shares, they are stuck in between rags and riches. In February 2017 Uber decided to create a program for employees that work at the San Francisco location for four or more years so that they can cash out. With the program employees can sell as much as ten percent of their shares in Uber. They hope that the buy back program will be used as an incentive to entice staff to stick around. Less than 200 of the 10,000 people employed by Uber are eligible for the buy-back stock option.
Recently Uber has been shaken allegations of sexual harassment by a former employee and criticism of how the harassment was handled by the company. Early investors have been quoted saying that they are “disappointed” & “frustrated” in how Uber handled the complaints. “We are disappointed to see that Uber has selected a team of insiders to investigate its destructive culture and make recommendations for change,” two investors stated. “To us, this decision is yet another example of Uber’s continued unwillingness to be open, transparent, and direct.” Dealing with criticism and public scrutiny are not a good place to be in when a company goes public.
Rideshare services should be willing to go public for the stake of the employees, investors, and the future of the company. Having an IPO allows a company to have a long-term competitive advantage above smaller “mom & pop” companies. There are plenty of start-ups that believe that going public brings on too much public market scrutiny. These companies find it easier to keep transparency, avoid be second-guessed on company policies or changes, and not have to report their financials. Historically speaking it is better for a company to go public than to stay private but until Uber and other rideshare companies decide they are ready investors and employers are stuck in limbo, guessing when they will be able to cash in on their piece of the company pie.