Uber Trades Below Last Private Value in Rocky Start After IPO

Andrew Cummings
May 13, 2019

This year, widely expected to be the busiest for mega USA tech listings this century, got off to a rocky start as a partial government shutdown shuttered the agency that approves IPO documents for 35 days, all but killing activity in the first quarter.

The ride-hailing company injected investors with a dose of reality right out of the gate, trading at $42 a share Friday - or almost 7% below its IPO price of $45 on an already volatile day for the markets.

Uber's assent to become the world's biggest ride-hailing company has come with a string of scandals which at times threatened the success of an eventual IPO.

That's hardly the "pop" that's associated with most IPOs, but with a few more hours of trading to go, Uber so far has avoided the worst.

Meanwhile, Uber made its debut in the stock market at a time when the US-China trade tensions hampered equity markets across the globe and more so in the US. The stock ended the day at $41.57 down 7.6%, joining a small list of major IPOs that ended their first day in the red.

That's highly unusual, especially for a high-profile tech company.

Uber had originally suggested a price range of $44-$50 for its share price listing, valuing the company at up to $120bn.

That crop includes Peloton Interactive Inc, Postmates Inc, Slack Technologies Inc and WeWork Cos, all of which have preparations in progress to go public this year.

Beyond Meat ended the week 165% over its IPO price with a valuation of $4 billion.

The company weathered controversies including the unearthing of a culture of sexism and bullying at Uber to a U.S. Department of Justice federal investigation, which culminated in the resignation of CEO Travis Kalanick. Pinterest extended gains to close 53% above its listing price of US$19 a share.

Uber was the biggest of a group of Silicon Valley startups that have spent years raising money in private rounds at record prices. 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. Its total operating losses over the past three years were more than $10 billion, according to filings.

Khosrowshahi said in the interview that while profitability was a priority for the company, public market investors should be judging Uber by a different measure once it starts reporting quarterly earnings.

"The most important sort of statistic to look at is bookings, because that reflects essentially what people are paying for the service", he said. Lyft shares hit a post-IPO low of $53 today, putting them 26% below their initial offering price.

At 12:07 pm Eastern time, Uber's shares were trading down 3.9 percent at $42.23, giving the company a market valuation of about $72.5 billion, according to a Bloomberg report, below Uber's latest valuation of $76 billion in August previous year.

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