Uber’s IPO nightmare gets worse as stock tanks again

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Uber’s nightmare debut as a public company continued on Monday, with the ride-hailing giant’s stock plunging more than 10 percent after a disastrous kickoff on Friday.

Shares of the San Francisco-based app were recently off $4.20, or 10.1 percent, at $37.37 as jitters about an escalating China trade war got coupled with investor fears that Uber continues to be lose billions of dollars a year amid fierce competition with rivals like Lyft.

The selloff left Uber’s market valuation at just under $64 billion as of midday Monday — well below the $76.9 billion valuation it got at Friday’s close and only slightly better than half the $120 billion valuation Uber’s banker Morgan Stanley had been gunning for late last year.

Before going public, Uber lowered its valuation expectations twice in two months to address investor concerns over the company’s mounting losses, and priced its initial public offering at the low end of the targeted range.

Rival Lyft, which went public at $72 a share on March 29, has lost a third of its market value since. Lyft shares were recently off 5.7 percent at $48.19 after hitting an all-time low of $47.38 in morning trades.

Both initial public offerings took place against a backdrop of renewed concerns on Wall Street over global growth due to the trade tensions, although US stock markets are all currently far higher than they were at the end of last year.

“The current narrative relating to the social economic nature of the ride-hailing segment is negatively having an impact on the shares of both Uber and Lyft,” said Zephirin Group analyst Lenny Zephirin.

While both companies are trying to find ways to lower driver costs to become profitable, drivers went on a protest in several US cities earlier this month demanding job security, livable incomes and a cap on the amount ride-hailing companies can collect from fares.

Investors have struggled to figure out how much Uber and Lyft are worth, given both companies have not estimated a timeline for turning a profit.

Lyft posted a $1.1 billion quarterly loss last week and forecast losses would peak this year as it controlled expenses and got more revenue from each customer.

Uber has warned in a regulatory filing that it may never be profitable.

In a note to investors, Wedbush Uber bull Dan Ives says that Wall Street is waiting for Uber’s big bets on autonomous driving to play out.

“Autonomous success is a prove me situation and thus not going to be an overnight success story,” he writes, adding that Uber is “just scratching the surface” of its full monetization potential.

Shares of Uber were down 8.8 percent Monday morning, at $38.04.

With Reuters



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