Posted by Joshua Franklin and Uday Sampath Kumar | 11 May 2019 | 994 times
Ride services giant Uber Technologies began life as a public company on Friday, under pressure to start trading strongly after conservatively pricing its initial public offering (IPO).
The start of trading comes after Uber, on Thursday, priced its IPO at $45 a share, at the lower end of its $44-$50 per share target range, to raise $8.1bn at an $82.4bn valuation.
The IPO was over-subscribed, but Uber settled for a lower price to avoid a repeat of Lyft’s IPO in late March, which priced strongly, began trading up, then plunged.
Uber also wanted to accommodate big mutual funds, which, unlike hedge funds, put in orders for a lower price.
Uber is due to begin trading on the New York Stock Exchange on Friday under the symbol “UBER”, the most anticipated US debut since Facebook seven years ago.
The IPO was also set against a backdrop of a spike in tensions between the US and China, which renewed fears of a global economic slowdown and hampered global markets.
“It reflects maybe a little bit more investor caution,” DA Davidson Companies analyst Tom White said of the Uber IPO. “Investors really want more of a tangible timeline and paths to profitability for these businesses than what people thought investors would require earlier on in the process.”
An Uber spokesperson declined to comment.
As a private company, Uber has raised more than $15bn from investors to fuel its growth and expansion into food delivery and freight hauling, with little regard for turning a profit. Uber lost $3.03bn in 2018 from operations.
Now a public company, Uber will have to deal with quarterly earnings reports and demands from shareholders to plot a path to profitability.
Uber’s assent to become the world’s biggest ride-hailing company has come with a string of scandals which at times threatened the success of an eventual IPO. The company weathered controversies including the unearthing of a culture of sexism and bullying at Uber to a US department of justice federal investigation, which culminated in the resignation of co-founder and CEO Travis Kalanick in 2017.
Uber eventually hired Dara Khosrowshahi, who had led online travel business Expedia, as CEO and he has set about cleaning up the company to get it in shape for an IPO. (Reuters)
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