Uber is officially the biggest high-profile market bust up ever| shares already down 17% | Effect being felt by investors shares
Uber’s disastrous start is the rockiest IPO debut in a while, now stands 17 percent less than its initial public offering price of $45.
Uber’s stock did not trade as well as we had hoped post-IPO. Sentiment does not change overnight, and I expect some tough public market times over the coming months. But we have all the capital we need to demonstrate a path to improved margins and profits,” Uber CEO Dara Khosrowshahi wrote in a memo to employees.
Uber’s shambolic market debut is quickly surfacing a paranoia against ride-hailing services and their ability to make profits anytime soon.
Biggest rival Lyft went public in March and has underwhelmed too. It joined Uber’s slide down dipping 6% to stand 33% down from its IPO price.
The US-China dispute didn’t help the cause of the upstarts – market dipped sharply after China responded to Trump with its own higher tariffs.
The effect was felt by biggest stakeholders as Japanese SoftBank, Uber’s largest investor saw its share price dip 3% in Tokyo.
Google parent Alphabet which has a 5% stake in Uber, also felt the heat as its share price too dipped almost 3%.
Failure of epic proportions is ‘very bad’ news for investors
Uber’s market debut wiped out $655 million of investor wealth on the first day
The price went down almost 8 per cent on the first day, becoming the 8th worst first-day performance for a US-listed IPO raising above $1bn.
Uber’s IPO price was itself underwhelming starting near the lower end of indicated range between $44 and $50. The $45 tag is less than what it was sold to some private investors three years ago.
Uber’s initials aspirational target of achieving $100bn has left them embarrassed with their valuation now around $70bn.
Sounds trouble for SoftBank’s market image
Uber’s largest shareholder Japanese investment firm SoftBank which has 13% stake in the company saw its price drop too. This could be damaging for SoftBank’s long term plans, with the market showing a mistrust around prospects of loss-making mega start-ups.
SoftBank also owns majority stakes in a number of other ‘unicorns’ which are headed in the IPO direction like Slack and WeWork. Wall Street’s skepticism around the business models of loss-making giant start-ups could leave SoftBank up against the wall.