Uber shares slide into negative territory in initial moments of trading
CEO says it was a tough week to go public, but is happy to complete IPO
Uber is suffering a terrible first day as a public company as its shares slid into negative territory in the initial moments of trading.
That's highly unusual, especially for a high-profile tech company. Shares of ride-hailing rival Lyft soared 21 per cent at one point during its initial public offering in late March. But that company has had a rough ride since, falling almost 30 per cent since it debuted.
Some analysts pointed to volatile market conditions over the past few weeks, and Friday as well. All major U.S. markets are in decline, having fallen three per cent or more this week.
SharesPost principal analyst Alejandro Ortiz said the timing for Uber trading to start was bad with the uncertainty over the trade spat with China. He said that if you saw value in Uber at its IPO price of $45 US, nothing has changed in the last 48 hours.
Despite his company's rocky stock market debut, Uber CEO Dara Khosrowshahi says he's thrilled to complete his company's IPO and did not consider postponing the date.
Khosrowshahi told The Associated Press on Friday it was a tough week to go public, but the company got it done.
He stressed that Uber is not a fair-weather company and keeps moving forward in tough and easy environments. He added that the $8 billion Uber raised is crucial for the company's future growth plans, and called it a great moment for Uber and the employees who worked so hard.
However, it is uncommon for a company with such a high profile to stumble out of the gate. Uber raised almost $25 billion in 23 rounds of financing before going public.
Matt Kennedy, a senior IPO market strategist at Renaissance Capital, says that over the past five years, just 10 per cent of U.S. technology companies backed by venture capital finished their first day of trading below their IPO price.
Facebook debuted in 2012, and after technical difficulties delayed its start to trading, it ended its first day just 23 cents above its IPO price of $38. Kennedy points out that unlike Facebook, however, Uber hasn't been turning profits.
Uber's stock was trading at about three per cent lower than its IPO price Friday afternoon.
The IPO came in at the lower end of Uber's targeted price range of $44 to $50 per share. Even at the tamped-down price, Uber now has a market value of $82 billion — five times more than Lyft's.