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Uber shares skidded Friday in a disappointing Wall Street debut following a massive public offering from the global ride-hailing giant.
After pricing at $45 for the initial public offering (IPO) — translating to a market value of $82 billion — Uber shares began the trading day lower, and closed with a loss of 7.6 percent at $41.57.
The decline, in a volatile session for Wall Street, came amid doubts over Uber’s path to profitability despite one of the biggest tech IPOs ever.
The drop was a “big disappointment” and suggested lower demand than expected for a major name like Uber, said Matt Kennedy, senior IPO market strategist at Renaissance Capital.
Kennedy said that both Uber and US rival Lyft were lower on concerns about hefty losses at the ride-hailing services. “Silicon Valley may not care about losses, but Wall Street does,” he said.
Ross Gerber of the investment firm Gerber Kawasaki said Uber had been overhyped, despite concerns about its business model, and estimated Uber’s value at no more than $60 billion.
“I don’t buy ride sharing and the current economics,” Gerber tweeted. “Questionable employment practices. And an unsustainable pricing structure. We’re passing on $uber and $lyft for now.”
Despite the staggering valuation, Uber dialed back some of its earlier ambitions for a value exceeding $100 billion after a rocky start for Lyft earlier this year.
Lyft, meanwhile, slumped more than seven percent, bringing its shares down about 29 percent since its March debut. Chief executive Dara Khosrowshahi and an Uber team rang the opening bell on the New York Stock Exchange after the firm raised about $8.1 billion in the IPO.
While Uber has lost billions since launching its first rides in 2011 in San Francisco, the company is aiming to develop a global brand that helps transform local transportation.
Whether Uber can drive to profitability using this model as it disrupts traditional taxi and transport services is a key question.
source (TDS)
