Uber's hyped-up IPO hits potholes on 1st day

Uber's hyped-up IPO hits potholes on 1st day

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. In the windup to the IPO, the company's bankers - led by Morgan Stanley, Goldman Sachs, and Bank of America - were suggesting a market value of as much as $120 billion, in part because Uber is one of the rare companies whose name has become a verb - like Google. Over the past five years, just 10% of such companies finished their first day of trading below their IPO price, said Matt Kennedy, senior IPO market strategist at Renaissance Capital, a manager of IPO focused funds.

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%. The company's losses may have played on some investors' minds, along with the poor performance of smaller rival Lyft whose shares are down around a quarter since its IPO at the end of March.

"As Uber's wealthy investors get wealthier today, remember that most of the drivers who built the company are still making poverty wages, often far less than minimum wage", Brendan Sexton, executive director of the Independent Drivers Guild, said Friday in a statement.

Against the backdrop of a US-China trade spat hitting Wall Street, shares sank below the company's listing price.

While both companies are banking on autonomous vehicles in the future to help them establish a profitable business, that is still some ways off, if ever, and there is already considerable skepticism among customers about the safety of self-driving cars. Some, like Uber and Lyft, are unprofitable.

And Uber's shares traded back towards the IPO price later in the day on Friday. The stock bounced around and by early afternoon was trading at about $44.50 per share.

"We stay away from IPOs for several reasons", Richard Mathes, president of Mathes Co., a NY investment adviser, said in an e-mail.

Uber hired 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. Meanwhile, in the United States, Uber is starting to lose market share to Lyft. Cofounder and former CEO Travis Kalanick, who resigned in 2017 under pressure from investors, was also seen on the trading floor.

Despite the volatile market, Khosrowshahi said he did not consider postponing Uber's IPO date.

Uber has said it has the potential to grow not just in the cab hailing business, but also as a "superapp" to provide logistic services, such as grocery and food delivery, organizing freight transportation, and even financial services, much like Grab, its Southeast Asian counterpart.

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