By Spencer Feingold
Uber shares closed at a disappointing $41.57 a share on its first day of trading on the New York Stock Exchange. The price was lower than its opening trade of $42 and down about 8 percent from the company’s initial public offering price of $45.
Under the ticker UBER, the company’s rocky market debut values Uber at roughly $70 billion — a far cry from the $120 billion that the company was reportedly seeking when it first began preparing its IPO last year.
The ride-hailing giant went public during a volatile week with markets on edge following days of contentious trade talks between the U.S. and China. On Friday, President Trump increased tariffs on $200 billion worth of Chinese imports and threatened more penalties, further sowing unrest in the markets.
“It is an interesting time to come to market, but there is never a perfect time to come to market,” John Tuttle, the NYSE’s global head of listings, told Cheddar. Yet, “we haven't seen many, if any, companies push their IPO’s back because of market conditions.”
Stocks across the board fell in recent days, with major indexes experiencing their worst week of the year. Apple ($AAPL), for example, lost $47 billion in market value this week; Amazon ($AMZN) and Alibaba both lost more than $30 billion.
Nonetheless, Uber’s IPO day valuation is the highest in five years. The market capitalization follows third behind Alibaba ($BABA), which was valued at $168 billion when it went public in 2014, and Facebook ($FB), valued at $104 in 2012.
Uber is also the latest Silicon Valley darling to go public before the company reaches profitability. In its filing to federal regulators, the company said it expects to post a loss of between $1 billion and $1.1 billion in the first quarter of 2019.
“It lost the money because it keeps investing in growth over and over and over again,” Bradley Tusk, the CEO of the investment firm Tusk Holdings, told Cheddar. Tusk was an early investor in Uber and one of the company's first political advisers.
“Anyone who is investing in Uber today is not doing it to see profitability in three quarters or even eight quarters,” Tusk said. “They’re doing it because they believe that in 10 years this is the Amazon of logistics. No one is investing in Uber to flip it tomorrow.”
Uber’s IPO also follows the rocky market debut of Lyft, which is still much smaller than Uber but is its primary North American competitor. Lyft ($LYFT) — which was valued at $24 billion on its IPO day in March — has since struggled to excite Wall Street with shares down 20 to 30 percent since its first day of trading on the Nasdaq. The stock closed down over 7 percent on Friday.
“The recent volatility surrounding both Uber and Lyft is partially driven by investor hesitance to invest in highly capital-intensive, deeply unprofitable, and untested business models at this late stage of the economic cycle,” Asad Hussain, an emerging technology analyst at PitchBook, told Cheddar in a statement.
Yet experts note that Uber’s ubiquitous presence in global cities and its expanding services give the company a broader future.
Uber’s market debut has a “big bets focus. It is not just about the vehicle,” Nick Martell, managing editor of news at the investing platform Robinhood, told Cheddar. “Look at Uber Eats, for example — a huge driver of potential growth for Uber.”
Along with Uber Eats, the company’s food delivery platform, Uber also recently launched Uber Freight, which creates an on-demand marketplace for shippers and carriers. The company also established an internal Advanced Technologies Group in 2015 that focuses solely on developing autonomous vehicle technologies.