Uber stock drops in rocky debut

Former Uber boss Travis Kalanick

Former Uber boss Travis Kalanick Credit Reuters

But even with Uber's lower share price, its valuation of $76 billion is four times more than Lyft's.

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

The year's biggest IPO comes against a backdrop of turbulent financial markets, fueled by the trade dispute between the United States and China, as well as the plunging share price of Lyft, which is down 23 percent from its IPO price in late March.

Some still consider the stock overpriced. Over the past five years, just 10% of such companies finished their first day of trading below their IPO price, said Matt Kennedy, senior IPO market strategist at Renaissance Capital, a manager of IPO focused funds.

This defensive position did little to keep Uber or its investors from taking on water within a single day of trading. It assigns a valuation to Uber of $82.4 billion, significantly less than the valuation of up to $120 billion that its investment bankers predicted a year ago.

-China trade worries. Moreover, smaller rival Lyft Inc's shares plunged this week after its first earnings as a public company. All major US markets are in decline, having fallen three per cent or more this week.

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The prospect of Lue feeling uncomfortable with two former head coaches on his staff is certainly understandable. The Lakers fired Luke Walton, who went 98-148 in three years at the helm of the team, in April .

Japan's SoftBank Group Corp 9984.T , for example, invested in Uber in early 2018 at $48.77 per share.

Uber might be even more popular if not for a series of revelations about unsavourybehaviour that sullied its image and resulted in the ouster of Travis Kalanick as CEO almost two years ago.

"We found a set of investors who are long-term oriented, that believe in our vision", Chief Executive Officer Dara Khosrowshahi said in an interview from the floor of the New York Stock Exchange. On Thursday, Axcella Health began trading well below its $20 IPO price and ended its first day at $13.80. As well as the original ride-hailing business, Uber is developing driverless cars and has a food delivery operation, Uber Eats. And when it is the only game in town, it's going to ratchet up its prices and wring every bit of money out of the drivers who make up its workforce.

Arun Sundararajan, a professor at New York University's business school, said that while going public will give Uber money to capture more of the transportation market, it could also push it to put quarterly targets ahead of its broader ambitions. What's more, some Uber drivers have been accused of assaulting passengers, and one of its self-driving test vehicles struck and killed a pedestrian in Arizona previous year while a backup driver was behind the wheel.

"The freedom to play the long game gets significantly reduced when you go public even when the resources to do so are increased", he said.

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