Uber IPO Prediction: It Could Be Delayed
With Uber Technologies Inc. valued as one of the largest private companies, when will it become public?
Presently, Uber is valued at around $69.0 billion. In recent months, however, there have been a lot of changes within the company’s executive structure that could delay an initial public offering (IPO).
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In June, Travis Kalanick, the founder of Uber, resigned as CEO. This was because of the chaos that was occurring behind closed doors, related to Uber’s business strategy and corporate culture. Two months later, Uber named Dara Khosrowshahi as its new CEO. Khosrowshahi previously held the CEO position at Expedia Inc (NASDAQ:EXPE) for 12 years.
Since Khosrowshahi has a proven record of running a company with a global presence, it should help Uber expand into new markets. Also, Khosrowshahi’s experience of running a public company, should improve the likelihood of Uber transforming from a private company into a publicly traded one.
In recent days, however, there have been a few moves by Kalanick that could delay the long-awaited IPO for Uber.
Travis Kalanick’s Board of Directors Choice
With all of Kalanick’s previous moves in the history books, the former CEO is still trying to control the company as much as possible from the outside looking in. In recent days, Kalanick appointed John Thain as an Uber board member with voting rights. Thain has served as the CEO for CIT Group Inc. (NYSE:CIT), the New York Stock Exchange (NYSE), and Merrill Lynch.
A controversy regarding Thain began because Kalanick appointed him to the Uber board without consulting the new leader of the company or the other current board members. It was a complete surprise for the company, and it alters the Uber’s business plans and prevent the company from having an IPO in 2019.
John Thain’s Merrill Lynch Controversy
A major concern is Thain’s history as CEO of Merrill Lynch, which creates even more changes within Uber that were not planned for, and that are not in line with Uber’s intended future direction.
Based on Thain’s career history, he does not create value for investors; he focuses on himself instead. For instance, while he was the CEO of Merrill Lynch, Thain decided to spend $1.2 million on furniture on his executive office. This would not have been a big deal if the company was growing, but this was during the Great Recession of 2008. (Source: “Merrill Lynch CEO Thain Spent $1.22 Million On Office,” CNBC, January 22,2009)
This is also the mentality that Kalanick had while he was the CEO of Uber, looking out for himself. When examining the current situation at Uber in more in depth, it seems that Kalanick picked Thain as a board member strategically, more for Kalanick’s own purposes than for the good of the company.
John Thain in Uber’s Board of Directors Could Cause IPO Delay
Thain’s move of announcing his own board membership without the knowledge of anyone else in the company seems to have been a power play by Kalanick. It appears that Kalanick is using Thain as his right-hand man in order to make business decisions on his behalf. This gives back Kalanick some power over the company he founded.
When the time comes for the board to make major decisions, Thain could side with Kalanick instead of doing what is good for the company.
This scenario could delay the long-planned event of Uber becoming a publicly traded company. At any moment in the future, if Kalanick feels powerless, he could use his unrestricted ability of stacking the board in his favor. Kalanick’s appointment of Thain to the board could be just the first of many moves.
By delaying an IPO and keeping the company private, there is a greater probability of Kalanick regaining power that he lost. When public shareholders become involved with a company, there are more strict rules that must be followed in terms of governance. When a company becomes public, more voting power is given to shareholders.
