Rumors of an Uber IPO started flying earlier this month when the company raised $1.2 billion in a funding round that valued the company at approximately $18.2 billion.
Before its most recent round of funding, the company had raised more than $307 million. Benchmark, TPG Capital, and Google Ventures were the company's largest investors at that point.
This enormous influx of cash makes Uber the most valuable tech startup on the market right now, and by a significant margin. The next closest startups are Airbnb, Xiaomi, and Dropbox, which have all raised $10 billion.
While the valuation is high, Money Morning's Defense & Tech Specialist Michael A. Robinson says it's warranted. According to him, the taxi-on-demand service is at the forefront of a major industry evolution.
"If ever there was an industry ripe for high-tech disruption it would have to be taxicabs," Robinson said. "Today, many taxis are equipped with GPS and other high-tech gadgets, a quantum leap from the humble beginnings of horse-drawn carriages 400 years ago in England. It's actually a complicated, multi-billion dollar sector that right now is going through perhaps the most profound changes of any business model in the United States."
"And the biggest name in the revolution is, of course, Uber."
Uber IPO: Roadmap to $1 Billion Revenue
Founders Travis Kalanick and Garrett Camp started Uber in 2009, following an incident where they couldn't hail a taxi during a stay in Paris.
Uber allows users to book a ride through a smartphone application, which uses navigation software to pinpoint the locations of users and drivers. The company uses more upscale vehicles like SUVs and town cars, as opposed to traditional taxi cabs.
"Many critics argue that when it comes to providing fast service, not much has changed with taxi cabs in the past 400 years," Robinson said. "But that all got turned 180 degrees when Uber was founded in 2009, and its mobile app was launched in 2010 in San Francisco. This app's power derives from the fact that it can identify as many as a dozen drivers a short distance from the person who needs a ride."
In addition to its disruptive business model, the company boasts huge revenue potential...
According to TechCrunch, Uber brought in approximately $213 million in revenue in 2013. Moreover, revenue has been doubling every six months, which constitutes an annual growth rate of nearly 145%.
But that could be just the tip of the iceberg.
The New York Times claims that Uber could potentially bring in $1 billion in annual revenue if it's able to capture a 50% market share of the U.S. taxi industry.
Mind you, that's in the United States alone. Currently, Uber operates in 36 countries and has plans to continue expanding.
"People who use this service rave about it to anyone who will listen," said Robinson.
"And I can honestly understand why people love it so much. I tested the technology by sending a black SUV to pick up my daughter, 15, from a friend's house," Robinson said. "A screen popped up with a map showing where the car was located. At the bottom was a small picture of the car's front end and a box with the driver's name and Uber rating. It also had his license plate number."
"Not only that, but the closer he got to picking up my daughter, the larger the map became. This was incredibly cool - I followed the icon of his car as it drove up to the front of the house. I had pushed a button on the app that allowed me to share the driver's route and had texted that to my daughter's iPhone. Then I tracked her as he climbed 1.6 miles to the top of the Oakland Hills for the drop off."
"Bear in mind, this all occurred phone-to-phone, seamlessly," continued Robinson. "Since I had an account, the service just billed me digitally, including a 20% tip."
No date has been set for a potential Uber IPO, but as news continues to break and the company continues to grow, Robinson and Money Morning will be following this incredible investment opportunity.
Is the Uber IPO something you would be interested in investing in? Join the conversation on Twitter @moneymorning using #Uber.
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