Uber shares fall amid disappointing IPO

Uber shares fall amid disappointing IPO

The ride-sharing platform lessened its expectations amid a number of investor concerns. 

 

Uber Technologies Inc shares were expected to fall another 7% yesterday, doubling losses since its poorly-received Wall Street debut on Friday and planting doubts about investors’ faith in its ability to make profits.

The move, which came amid a wide-ranging sell-off on global financial markets sparked by US-China trade tensions, indicated shares opening at $38.54, valuing the company at almost $11 billion less than Friday’s debut of $45.

Prior to going public, Uber lowered its valuation expectations twice to address investor concerns over the company’s mounting losses, and priced its initial public offering at the low end of the targeted range.

Meanwhile, Rival Lyft Inc, which went public at $72 a share on March 29, has lost a third of its market value since the IPO and was down 3% at $49.50 in trading before the bell.

 

Broader Problems

Context is king. Both IPOs took place against a backdrop of renewed concerns on Wall Street over global growth due to trade tensions between Washington and Beijing, although US stock markets are all currently far higher than they were at the end of last year.

While both Uber and Lyft are trying to find ways to lower driver costs to become profitable, drivers went on a protest in several US cities earlier this month demanding job security, livable incomes, and a cap on the amount ride-hailing companies can collect from fares.

Many analysts believe that investors need to be patient as Uber reaches full monetization potential between its ride-sharing platform and broader growth engine, which includes Uber Eats, Uber Freight, and autonomous driving initiatives.

2019-05-13T16:58:46+00:00

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Paul Imison
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