No Grand Entrance into the Public Markets for Uber

May 13, 2019 8:58 am Published by
Uber Technologies Inc.’s introduction into the stock market was rather low key compared to the publicity it has received over the past several months of anticipation. After setting a conservative IPO price of $45, the company’s stock opened $42 this morning, resulting in a company valuation of about $77 billion, considerably lower than the originally speculated $120 billion. The drop in share value could be attributed to an overall market decline today because of the ongoing apprehension caused by the U.S. – Chinese trade hostility, but also because of investor doubt that Uber can steer itself towards profitability.

The company’s IPO filing showed an adjusted EBITDA loss of $1.85 billion for 2018, but in an interview with CNBC, Uber CEO, Dara Khosrowshahi, said that 2019 should be the company’s peak year for losses, although he also stressed that there can’t be any guarantee. Khosrowshahi also pointed out that, “if you do look at the growth rates, our audience is growing 33 percent on a year on year basis, transactions are growing 36 percent. To be able to grow transactions 36 percent on a $50 billion base is pretty incredible, and we hope to keep it going.”

Prominent Wedbush Securities analyst, Dan Ives commended Uber for its moderate share pricing, saying, “We view Uber’s conservative pricing as a smart and prudent strategy coming out of the box as it clearly learned from its ‘little brother’ Lyft, and the experience it has gone through over the past month.”

While Khosrowshahi and fellow Uber associates took center stage to ring the bell at the New York Stock Exchange, co-founder Travis Kalanick, who resigned in 2017 after various controversies, watched from an NYSE balcony with his father.