Uber, the global private-hire taxi business, has been a publicly-quoted business for less than a week, but has already experienced the sort of rocky ride that its passengers would not appreciate.
The stock being offered was priced at $45, putting an $80 billion price tag on the company.
This itself was well down on the $100 billion it had once hoped to achieve, and partly reflected concerns in the wake of an unsuccessful initial public offering (IPO) in late March for smaller rival Lyft.
The blame game
On 10 May, the shares were floated on the New York Stock Exchange and promptly went to a discount, closing the day at $41.57.
The apparent rout continued until the stock hit $37.10 on 13 May – only the second day of trading, given the weekend had intervened.
As a further slide seemed on the cards, the “blame game” was under way. Some said Uber’s advisers had mis-priced the offer, pointing out that investment bankers had advised last year that Uber was worth $120 billion.
Then there were the “reputational issues” that have dogged Uber, from allegations of having paid bribes in Asia to a £385,000 fine from UK regulators for a data beach affecting nearly three million British users.
But more fair-minded commentators suggested Uber had been unlucky in its timing, with markets generally disconcerted by the US-China trade dispute.
Indeed, by 15 May, the shares had bounced modestly to $41.29, suggesting the price slide had, temporarily at least, been halted.
“Our road will be the same”
This followed a rallying call via email to the company’s 22,000 staff from chief executive Dara Khosrowshahi. He wrote: “There are many versions of our future that are highly profitable and valuable, and there are of course some that are less so.
One major concern remains, however, which is that Uber has never made a profit and, last year, lost $3.03 billion. Quoting one analyst, The Guardian suggested this operational longevity, plus the fragile market background, jointly explained the poor debut: “’It looks like the market just wasn’t ready for these mega loss-making ride-hailing firms.’”
Lurking in the background remain regulatory problems in various jurisdictions, where Uber’s operations are seen to defy legal regimes that allow only authorised taxis to pick up passengers on the street.
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