Four reasons Uber's IPO stalled on Friday

12 May, 2019, 03:29 | Author: Gerard Cortez
  • 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 previous year on $1.8 billion in revenue.

Even at the tamped-down price, Uber now has a market value of $82.4 billion - significantly more than century-old automakers General Motors and Ford Motor.

Even the IPO price set on Thursday was a disappointment compared to some expectations.

Lyft's IPO has been lackluster in its opening weeks, with shares trading at around $52 Friday, down from an opening day high of $78, down a whopping 33%.

In distributing the stock, Uber prioritised shareholders - particularly institutional investors - that it thinks will hold on to the shares for a long time.

However, the IPO still represents a watershed moment for Uber, which has grown into the world's largest ride-hailing company since its start 10 years ago.

Uber was the most anticipated tech IPO since Facebook in 2012, and its rough start could dampen enthusiasm for the expected stock offerings of other tech companies with a lot of buzz and no profits. Only about a fifth of IPOs have ended their first day of trading in the red in the last two years, according to Dealogic data.

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And Uber's shares traded back towards the IPO price later in the day on Friday. Investors have also been somewhat jittery about Uber, after its rival, Lyft, also had a lackluster IPO.

The ride-hail giant finished its first day of trading on the New York Stock Exchange down almost 8 percent - making it the worst IPO for a marque name in at least a decade. At $45 per share, his stake in Uber will be worth $5.3 billion.

Uber launched its IPO today on the New York Stock Exchange at the very low end of the price range it was considering, $44 to $50 a share, with an initial price of $45 but it fell nearly immediately to $42 a share. "These include avoiding mispricing by the banks underwriting the offering, the usual gyrations an IPO stock goes through in the early days of trading, and the volatility associated with insider selling and lockup periods".

FILE PHOTO: The Logo of taxi company Uber is seen on the roof of a private hire taxi in Liverpool, Britain, April 15, 2019.

The company weathered controversies including the unearthing of a culture of sexism and bullying at Uber to a US Department of Justice federal investigation, which culminated in the resignation of co-founder and Chief Executive Travis Kalanick in 2017.

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. As well as the original ride-hailing business, Uber is developing driverless cars and has a food delivery operation, Uber Eats.

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