Should you invest in the Uber IPO?

Uber Technologies dropped its offering prospectus late Thursday as it prepares for an initial public offering in May. The one number it hopes potential investors will notice is revenue growth, which was up 42% last year to $11.3 billion from $7.9 billion in 2017.

That’s probably enough for the growth-at-any-price crowd to hop in with UberUBER, +0.00%  . But investors chastened by the first-day surge and subsequent 20% plunge of chief ride-sharing rival Lyft’s  stock will be particularly alert for red flags.

They won’t have to look hard, because at least four crimson banners are flying in plain sight…

1. Uber is losing money and probably won’t make any: When you ignore the funky metrics the company puts forward (“Adjusted” EBITDA? Core Platform Adjusted Net Revenue?), Uber had $3 billion in operating losses in 2018 and $10.1 billion over the last three. And the company warns it’s just getting started: “We anticipate that we will continue to incur losses in the near term as a result of expected substantial increases in our operating expenses” for new hires, discounts and incentives to gain or maintain market share, and investments in what the company itself calls “new and unproven” technology.

“We may not succeed in increasing our revenue sufficiently to offset these expenses,” the offering states. “We expect our operating expenses to increase significantly in the foreseeable future, and we may not achieve profitability.”

2. Growth is plateauing and Uber faces stiff competition in all its businesses: Quarter-over-quarter customer growth and gross bookings in Uber’s core-ride sharing business were in the single digits through much of 2018, while revenues in ride sharing actually fell by $1 million from the third to the fourth quarter. Meanwhile, Uber Eats, supposedly a big growth business, saw revenues decline by $26 million over the same period — probably the result of discounts and incentives.

“We face significant competition in each of the personal mobility, meal delivery, and logistics industries globally from existing, well-established, and low-cost alternatives,” the company wrote. “That greater competition…

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