Uber IPO Sputters, Stock Already Trading Below Initial Price

Former Uber boss Travis Kalanick
Credit
Reuters

Former Uber boss Travis Kalanick Credit Reuters

In particular, Uber's poor reception raises questions about how WeWork might be valued in an IPO after posting $1.9 billion in losses a year ago on $1.8 billion in revenue. Nevertheless, the offering values Uber at $82.4 billion - impressive, no doubt, but less than the $100 billion forecast Uber floated to investors this year and far below the $120 billion that some bankers anticipated last year. Even Lyft had a bit of a first-day bounce on its IPO day!

Shares ended the trading day at $41.57 while its Bay Area rival Lyft saw its shares tumble to $51.09 a share. According to e-commerce research company Edison Trends, Uber's market share has fallen from 68% to 64% over the past year. Retail investors at TD Ameritrade executed more trades in the first ten minutes of Uber's debut than in Lyft's first 2-1/2 hours. "The fortunate thing we've seen with most of the people that trade IPOs is these people don't buy and [then] sell that day".

Nelson Chai, the company's chief financial officer who was at the NYSE to mark the first day of the stock's trading, said in a CNBC interview that he was not focused on one day of trading and was more concerned about the company's long-term outlook.

"Ultimately, the success of Lyft's and Uber IPO's offerings will be judged based on post-IPO performance and how these companies can sustain their growth, while moving toward profitability and lowering their cash burn", said Alex Castelli, managing partner at advisory firm CohnReznick.

Uber is yet to make a profit and warned recently it may never do so. Even at the low end of the price range, Uber's listing was the ninth-largest US IPO of all time and the biggest on a US exchange since Alibaba Group Holding Ltd's US$25b global record holder in 2014, according to data compiled by Bloomberg.

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And with their devastating loss against the Milwaukee Bucks recently, those chances have considerably decreased. Kyrie ain't the guy who told Rachel Nichols in FEBRUARY that the team was going to win the Finals.

Kalanick remains on Uber's board, although he isn't expected to be on the podium to help ring the opening bell at the New York Stock Exchange to herald the company's debut Friday.

With both companies locked in a fight for market share, facing driver protests as well as huge losses, something will have to give eventually. As of Friday's closing price, his stake in Uber will be worth $4.9 billion. Uber's revenue past year surged 42% to $11.3 billion while its cars completed 5.2 billion trips around the world either giving rides to 91 million passengers or delivering food.

Uber has also weathered controversies including revelations of a culture of sexism and bullying at Uber and U.S. Department of Justice investigations.

Uber hired Dara Khosrowshahi as CEO to replace Kalanick and clean up the mess, something that analysts say has been able to do to some extent, although Lyft seized upon the scandals to gain market share.

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