Uber Moves Backward In Its IPO

Former Uber boss Travis Kalanick

Former Uber boss Travis Kalanick Credit Reuters

Uber's valuation is nearly a third less than the valuation of up to US$120 billion that its investment bankers predicted previous year.

The company had been expecting a valuation as high as $120 billion as it prepared to go public, but in its most recent private funding round, investors had valued it at just $76 billion after posting a $3 billion loss a year ago. Lyft's shares closed Thursday 23% below its IPO price of $72 in April. -China trade worries. Moreover, smaller rival Lyft Inc's shares plunged this week after its first earnings as a public company.

"We are willing to give quite a bit of rope and leeway on current profitability if you can show how you're going to get there", said Jordan Stuart, a portfolio manager at Federated Kaufmann who often purchases companies' shares during an IPO.

Part of the problem is that Uber continues to lose money, including a $1.8 billion loss in 2018, down from a loss of $2.2 billion the previous year.

Uber's debut is the largest for an American technology company since Facebook's listing in 2012.

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.

Like numerous IPO class of 2019, including Lyft and Pinterest Inc., Uber is unprofitable.

Speaking to RT, the director of options at Simpler Trading, Danielle Shay, said the IPO debut may not be that bad for the firm long term, even though tech stocks normally surge after IPOs.

Ride-hailing giant Uber failed to take off like fellow tech peers when it started trading on the New York Stock Exchange.

The IPO came in at the lower end of Uber's targeted price range of $44 to $50 per share. As of Friday's closing price, his stake in Uber will be worth $4.9 billion.

Watching the stock crash from the NYSE trading floor Friday was former CEO Travis Kalanick, who was barred from participating in the opening-bell ceremony by current CEO Khosrowshahi, according to a New York Times report.

The company weathered controversies including the unearthing of a culture of sexism and bullying at Uber and a US Department of Justice investigation, which culminated in the resignation of Kalanick.

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.

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

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