Uber’s long-awaited and highly-anticipated public listing has flopped, with the ridesharing giant’s shares plummeting on its first day of trading.
Uber listed on the New York Stock Exchange on Friday, but the tech titan’s already conservatively-priced shares dropped on debut and continued to fall across its first day as a public company.
It follows a series of controversies for Uber, including worldwide calls for stricter regulation and a class action lawsuit in Australia.
Uber had an IPO price of $US45 per share, but opened at $US42 and dropped by 7.6 percent to close at $US41.57 on its first day of trading.
This gives the tech giant a market cap of about $US76.5 billion, well below the $US100 billion-plus that it had been expected to obtain.
Today, shares are sitting at $US37.10, after hitting a low of $US36.08 yesterday.
Lyft, one of Uber’s biggest rival, has also struggled after going public in March with its shares now trading at more than 20 percent below the listing price.
It was an admittedly difficult week for a company to go public, with tensions between the US and China leading to a volatile market, and a weak financial report posted by Lyft.
Uber CEO Dara Khosrowshahi remained positive though.
“It’s a great moment for the company and all the employees who have been working so hard to get there,” Khosrowshahi said.
“It was a tough week to go public, but we got it done. Our company is not a fair-weather company.
“We keep moving forward in tough and easy environments, and I think that we as a company will be a great investment over the long term.”
Renaissance Capital co-founder Kathleen Smith said Lyft’s weak earnings report would have influenced Uber’s performance more than the political turmoil.
“While the trade war has caused overall stock market volatility, we believe that the poor trading in Lyft was the major factor impacting Uber,” Smith told Bloomberg.
“Investors are applying the valuation multiples of Lyft to Uber. And as the Lyft stock dropped, so did Uber.”
Shares in Lyft also dropped by more than 7 percent on Friday following the filing, dropping an overall 18 percent across the whole week.
Uber’s boss sought to emphasis its growth potential in the face of the disappointing opening.
“My reaction [to the share price] is if we build and build well, shareholders will be rewarded,” he said.
“We’re certainly not measuring our success over a day, it really is over the years.”
Investors were likely spooked by Uber’s mounting financial losses and worldwide controversies, including calls for its drivers to be reclassified as employees and for stricter regulations on its operations.
Uber’s pre-filing documents outlined the company’s financial struggles. Despite generating $US11.27 billion in 2018, up more than 50 percent year-on-year, the company still lost $US1.8 billion.
At the end of last year, Uber had $US6.4 billion on hand, but $US6.9 billion worth of long-term debt.
The filing also said that Uber is expecting its operating expenses to “increase significantly in the foreseeable future” and that it “may not achieve profitability”.
The company raised about $US8.1 billion through the IPO process.
Among the issues Uber is facing around the world is a class action suit in Victoria that was filed in the Supreme Court earlier this month.
More than 6000 taxi and car-hire drivers, operators and licence owners in four states are taking part in the class action suit, which alleges Uber operated illegally and had an unfair competitive advantage over the taxi industry.
Maurice Blackburn Lawyers has launched the class action, claiming Uber “exploited people by operating outside of regulations”.