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How UK investors can trade Uber’s upcoming US$100bn IPO

With big companies such as Uber, it’s almost impossible for retail investors to take part in the IPO, but there are ways of investing in the taxi app before its upcoming debut in New York…
uber app
Uber could be valued at over US$100bn when it floats

Uber is widely expected to publicly file for its initial public offering over the coming days, and possibly as early as Thursday afternoon, according to some reports.

Typically, only a select few institutions are able to participate in big firms’ IPOs, and that looks like being the case with Uber.

So if you can’t buy shares as part of the initial flotation, how can you get involved before the stock starts trading on the New York Stock Exchange?

There are a couple of ways, actually.

Grey markets

One way is through so-called grey markets being offered on trading platforms such as IG and Markets.com in the run-up to the listing.

On these platforms, investors can’t buy any of the shares, they can just speculate on what Uber’s value will be.

For example, IG users can bet on whether Uber’s market capitalisation will be lesser or greater than US$111bn at the end of its first day of trading.

As a reminder, this is a form of leveraged trading, which can multiply punters’ gains, but it can also multiply their losses, so exercise some caution!

Invest in firms with stakes in Uber

A more indirect approach would be to buy up shares in publicly-traded companies that have already invested in Uber.

Microsoft, Alphabet and BlackRock all have sizeable stakes in the taxi app.

Given that Uber’s post-IPO shares would become part of these firms’ balance sheets, Uber’s share price movements will likely be reflected in their own stocks.

Take a look at Yahoo!, for example. In the run-up to Alibaba’s listing in 2014, Yahoo! made strong gains as a result of its large stake in the Chinese ecommerce giant.

You could always wait

Of course, investors can always wait until after the event.

Platforms such as Hargreaves Lansdown and AJ Bell will offer the shares on their apps and websites.

UK investors will have to fill out a tax form before buying US stocks, but other than that it should be as easy as buying shares in UK companies. Log in, select the company, select the amount and trade.

One of the upsides to this is that it gives investors a chance to see how the stock performs on the open market first. How some of Lyft’s initial investors might wish they’d have waited…

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Article
April 12 2019

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