Uber shares sink ahead of second trading day

Lloyd Doyle
May 13, 2019

Uber also notes that it has already given $20 million to its drivers to settle a similar lawsuit and expects the amount of settlement money it will shell out this year "will fall within an approximate range of $146 million to $170 million". After submitting its confidential filing in December, Uber - along with Lyft Inc. and a host of other hopefuls - was left sitting on the sidelines while US stocks enjoyed the best start to a year in at least a decade.

The Uber logo is seen at the second annual Uber Elevate Summit, on May 8, 2018 at the Skirball Center in Los Angeles, California.

Uber sold 180 million shares on Thursday at $45 each in its initial public offering, the process by which institutional investors buy shares ahead of a stock market listing.

In distributing the stock, Uber prioritised shareholders - particularly institutional investors - that it thinks will hold on to the shares for a long time.

After falling close to 9 per cent Friday, shares of Uber Technologies Inc. are down less than 1 per cent.

As of this writing, Uber shares are trading at $43.29.

"Unlike Facebook, however, Uber does not make money", Kennedy said. Ives, his family and his firm do not own shares of Lyft.

Despite all that, Uber's IPO is the biggest since Chinese e-commerce giant Alibaba Group debuted in 2014. Such a first-day downward price movement indicates that the company, which has yet to turn a profit in its ten years of existence, has been overvaluing itself to investors, and is now going to have to pay for it.

Along with Uber, they'll be following companies like rival Lyft Inc, Pinterest Inc and Beyond Meat Inc to market.

Boss Dara Khosrowshahi was among those who rang the opening bell of the New York Stock Exchange to begin trading.

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. Hundreds, if not thousands, of other Uber employees are expected to become millionaires in the IPO.

"The sound you hear of the stock dropping is the sound of the bubble bursting for high valuations in the private markets", said Renaissance Capital's Kathleen Smith, an ETF Manager with a focus on IPOs.

The share slump reflects investor skepticism about the size of the ride-hailing market, Uber's ability to execute on food and package delivery and its push into autonomous vehicles, said Ygal Arounian of Wedbush Securities.

Other reports by Iphone Fresh

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