A very bad year has dropped Uber’s valuation from about $69 billion to $48 billion, a decline of 30 percent.
The Wall Street Journal has the scoop, reporting Thursday afternoon that early investors tendering stock agreed to a price drop that Japanese conglomerate SoftBank had proposed back in November.
In exchange for SoftBank’s investment, the Uber board agreed to a series of reforms designed to prepare the company for a 2019 IPO. Numerous outlets had reported in the fall that the company’s valuation would take a hit, after a year that began with a boycott and continued with a gantlet of scandals that culminated in the replacement of founder and CEO Travis Kalanick with Dara Khosrowshahi.
But the deal was contingent on shareholders accepting the lower price, which they did Thursday. SoftBank and its partners will take control of nearly 20 percent of the company, which complements the firm’s existing investments in Uber and its rivals.
For Uber, the sale finally puts a price tag on a miserable 12 months. But as my colleague Will Oremus suggested last week, it may be the model, not the management, that cost investors their gargantuan valuation:
“Now that Uber has toppled many of the legal hurdles and created a huge market, it’s becoming clear that the barriers to competition are surmountable—especially at the local and regional levels,” he wrote.”Ultimately, it’s a lot easier to build an effective Uber equivalent for a single city or country than it would be to build an effective Google, Facebook, or Apple equivalent—or, for that matter, a Toyota, Ford, or Tesla equivalent.”
A $48 billion company is nothing to sneeze at, of course. But the prospect of one company at the helm of a profitable, global transportation empire just isn’t looking as likely now as it did at the end of 2015.