New York: Uber Technologies Inc’s shares fell nearly 9% in their debut on Friday, marking a rocky start to one of the most high-profile US initial public offerings since Facebook Inc’s seven years ago.
The stock’s opening at $42 (Rs 2,940) undermined Uber’s strategy to price its oversubscribed IPO conservatively at $45 (around Rs 3,150) per share to avoid a repeat of rival Lyft Inc’s stock market struggles following a strong debut in March.
The lacklustre market response comes against the backdrop of a spike in trade tensions between the US and China and increased investor skepticism about the company’s ability to turn profitable soon enough.
The IPO marks a landmark moment for the decade-old company, which was started after its founders struggled to find a cab on a snowy night and grown into the world’s largest ride-hailing company, making more than 10 billion trips.
Led by Chief Executive Officer Dara Khosrowshahi, a team of Uber officials were on the NYSE trading floor to mark the start of the day’s trading. Co-founder and former CEO Travis Kalanick, who resigned in 2017 under pressure from investors, was also on seen on the trading floor.
The company’s road to IPO was marred by several hurdles including increased regulations in several countries and fights with its drivers over wages.
Uber has said that it has the potential to grow not just in the cab hailing business, but also as a “superapp” to provide a variety of logistic services, such as grocery and food delivery, organising freight transportation, and even financial services, much like Grab, its Southeast Asian counterpart.
As a private company, Uber has raised more than $15 billion from investors to fuel its growth and expansion into food delivery and freight hauling, with little regard for turning a profit. Uber reported a loss of $3.03 billion in 2018 from operations.
But as a public company, it will have to deal with quarterly earnings reports and demands from shareholders to plot a path to profitability.
The company weathered controversies including the unearthing of a culture of sexism and bullying at Uber to a U.S. Department of Justice federal investigation, which culminated in the resignation of Kalanick.