Uber shares fall on stock market debut

Uber shares fall on stock market debut

Uber Technologies Inc. raised $8.1 billion in its initial public offering after pricing shares near the bottom of their marketed range. Even at the tamped-down price, Uber now has a market value of $82 billion - five times more than Lyft's. The company is hoping to avoid the tumultuous first weeks of trading in rival Lyft Inc., whose shares fell below its $72 IPO price within days of listing and closed 23 percent below that price Thursday.

In distributing the stock, Uber prioritized shareholders - particularly institutional investors - that it thinks will hold on to the shares for a long time, according to a person familiar with the matter. But when investors feel the need for increased safety, it's surely harder to find buyers for the stock of a cash-burning company with a history of run-ins with regulators and employees. Facebook's stock now trades just below $200.

Like numerous IPO class of 2019, including Lyft and Pinterest Inc., Uber is unprofitable. The San Francisco company already has lost about $9 billion since its inception in 2009 and acknowledges it could still be years before it turns a profit.

A market value of less than $75 billion is a considerable climb down from earlier projections: past year, bankers jockeying to lead the offering told Uber it could be valued at as much as $120 billion in an IPO.

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The listing gives Uber another roughly $8 billion to fund investment in its expansion, adding to the almost $25 billion raised in 23 private funding rounds, according to Crunchbase. Chinese e-commerce giant Alibaba went public in 2014 with a valuation of $168 billion. Some Uber drivers have been accused of assaulting passengers, and one of its self-driving test vehicles struck and killed a pedestrian in Arizona a year ago while a backup driver was behind the wheel.

To be fair stock markets had a rocky week thanks to an escalating trade war between China and America. Kalanick remains on Uber's board and while he kept a relatively low profile during the stock debut, he can still savour his newfound wealth.

SharesPost principal analyst Alejandro Ortiz said the timing for Uber to start trading was bad given the uncertainty over the trade spat with China.

"It's going to keep bouncing around for months to come", Ortiz said. The company has seen steep losses since its listing on the exchange.

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