Uber Just Had a Lousy Debut After its Highly Anticipated IPO

03:49 05/13/2019

Everybody and anybody has been talking about ride hailing giant Uber's UBER  IPO this year.

Well it happened, and it was not impressive. In fact, it was the worst IPO for a company of its size.

Uber debuted in the market for trading this past week at $42 a share, after pricing its IPO at the low range of what it had expected.

Trading under the ticker symbol 'UBER,' shares actually fell on their first day of trading by almost 8% at the end of the day on Friday.

When Uber first was said to go public, the company received a reported valuation of $120 billion. The stock closed on Friday with a market cap of only $69.7 billion instead.

The company's chief financial officer, Nelson Chai, said that Friday 'was a tough day' on the market in an interview on CNBC.

'I don't think that we're smart enough to try to judge the market. ... We weren't optimizing to have the best opening price or the opening day. We're really looking for how the stock continues to trade over time and that's what we're building for,' he responded, when he was asked about whether the company should have delayed the IPO.

CEO Dara Khosrowshahi has remarked about the comparison that Uber gets to Lyft and said, 'It's a fair comparison at the wrong time. So a lot of private companies now are holding off much longer before they go public. We are much bigger, much more mature as a company as we go public, and if you do look at the growth rates, our audience is growing 33% on a year-on-year basis, transactions are growing 36%. To be able to grow transactions 36% on a $50 billion base is pretty incredible, and we hope to keep it going.'
If Khosrowshahi can keep Uber's valuation above $120 billion for 90 consecutive days once it goes public, he will win net stock bonuses topping $100 million. What incentive huh?

He said to CNBC, 'I'm here to stay. I'm here to build a big company. That compensation term is not about a single day, it's about what value you create over 10 years, and over 10 years, absolutely I expect to get there.'
Shawn Carolan, an early Uber investor and partner at Menlo Ventures remarked, 'Uber is a great reminder to venture capitalists that the biggest opportunities lie in our most common needs as humans. When a startup presents, look beyond the current product, which often feels trivial, to the underlying need being served. An on-demand black car service was easy to dismiss, but nearly everyone needs transportation.'

Last year Uber had a 24% increase in revenues and a 37% rise in gross bookings, but its adjusted loss hit $1.8bn.

In the first three months of this year, Uber drivers made 1.5 billion passenger journeys.


This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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