Uber Technologies Inc. is currently seeking $2.1 billion in funding, which would value the company at $62.5 billion.
Although there isn't a date set for an IPO, the hype from this valuation will inevitably drive up the Uber IPO price when it does come to market.
Uber CEO Travis Kalanick stated that the company wasn't mature enough to go public, but the Uber IPO is still the most anticipated IPO of 2016. After all, the company has already raised $7.4 billion even prior to this recent funding round.
Through this newest round of financing, Uber will fund its international expansion plans, according to Bloomberg.
And Uber hasn't exactly had a hard time finding investors in 2015 either...
It received $1.6 billion from clients of Goldman Sachs Group Inc. (NYSE: GS) in January, and followed that with a $1 billion investment from Microsoft Corp. (Nasdaq: MSFT) in July.
Uber is a disruptor to the transportation industry, and investors are lining up to be a part of something new and exciting.
In Q1 2015, business spending on Uber accounted for 46% of the entire transportation market. That's triple the reach of Uber's 15% market share in Q1 2014.
But like many initial public offerings, the Uber IPO price will be based on speculation and excitement.
Uber officials say the company had $400 million in revenue in 2014. If Uber reaches a $62.5 billion valuation, that means the company is valued at 150 times revenue.
A $62.5 billion valuation would also make Uber bigger than major companies like Twenty-First Century Fox Inc. (Nasdaq: FOX), Ford Motor Co. (NYSE: F), and Time Warner Inc. (NYSE: TWX).
Since there is no timetable for the Uber IPO, it's still too early to project an exact Uber IPO price.
But based on the hype surrounding recent IPOs, it's likely the Uber IPO price will be high. Shortly after the Ferrari NV (NYSE: RACE) IPO, the stock climbed all the way to $60.97. And Ferrari is only worth $9.2 billion compared to Uber's $62.5 billion.
While we wait for the Uber IPO date, there is one simple strategy that can help investors profit from the IPO market months before Uber stock is available...
Before the Uber IPO Price Is Set, Here's How to Profit
If you want to invest in the Uber IPO, the best way to accomplish that is through an IPO exchange-traded fund (ETF).
The First Trust IPOX-100 Index Fund ETF (NYSE Arca: FPX) and Renaissance IPO ETF (NYSE Arca: IPO) are two of the best options. And they help investors cut down on the risk of IPO investing...
You see, when the IPO price for a company is set, banks and large investors are able to buy in at the IPO price. So if the stock opens higher, these are the investors who experience immediate gains. And that's the first time retail investors can buy in. If the stock has already soared out of the gate, investors like you and me are buying in at an inflated price.
For example, Square Inc. (NYSE: SQ) set its IPO price at $9, which is where institutional investors got it. When SQ opened on Nov. 19 at $11.20 per share, they had already banked a gain of 24%. But retail investors only got to buy in at the $11.20 opening price. SQ stock opened at $11.95 today, which means retail investors have seen much smaller gains.
FPX helps retail investors avoid the trap of buying into early IPO prices. FPX aims to correspond to the performance of the IPOX-100 U.S. Index, which measures the performance of the top 100 companies ranked by market cap in the IPOX Global Composite Index. The global index will only include a stock after it has traded for at least seven days. It then removes the stock on its 1,000th day of trading.
The Renaissance fund seeks the largest and most liquid newly listed U.S. IPOs. Similar to FPX, the Renaissance fund will only add positions in IPOs after a certain amount of days. The Renaissance fund adds IPOs that have traded for at least five days and removes positions after two years.
It's uncommon that an ETF will provide the type of gains an IPO can offer in a day, but the initial volatility of owning an IPO is also mitigated.
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Each fund will most likely add a position in Uber once it begins trading.
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