10. May (Reuters) – Uber Technologies Inc.'s Conservative Initial Public Offering could not keep its shares from sinking into its trading debut on Friday, and debating on Wall Street whether the outcome of the most anticipated listing since Facebook Inc would weigh on other Silicon Valley unicorns.
Uber is considered to be public for at least four years. Yet, the rallying company took a week for its IPO plagued by market turbulence driven by US and Chinese trade problems. In addition, less competitive Lyft Inc shares this week after their first earnings as a public company.
Uber was the largest of a group of Silicon Valley startups who spent years raising money in private laps at record prices. Many of these companies now want to follow their own IPO. Some, such as Uber and Lyft, are unprofitable.
Workplace messaging company Slack Technologies Inc plans to hold an investor presentation Monday ahead of direct listing next month. Food and Food Delivery Platform Postmates, WeWork Owner The We Company and Online Mattress Dealer Casper Sleep are among startups looking to launch IPOs this year.
"If a venture capital investor wants to burn money, they can do it as long as they want, but when you get to the public markets, you need to show profitability or a path to it," said Jordan Stuart, portfolio manager at Federated Kaufmann. Ober shares ended the day down 7.6% at $ 41
Uber priced its IPO on Thursday at the low end of its targeted lineup, hoping that this approach would save it was the trading halt that Lyft experienced.
Lift ended at 6.9% on Friday and is 28 percent below IPO price.
Nevertheless, the world's largest driving business seemed to generate more interest from mother and spouse. rade performed several trades in the first ten minutes of Uber's debut than in Lyft's first 2-1 / 2 hours.
Uber had already lowered its valuation expectations twice over the past two months to tackle investor concerns over its mounting losses.
While Uber investors such as Benchmark, Menlo Ventures, First Round Capital and Lowercase Capital made a murder in the listing, there were also no centering backers.
For example, Japan's SoftBank Group Corp. <9984.T > invested in Uber in early 2018 at $ 48.77 per share. It has also bought shares at a much lower price in a large secondary transaction.
To be sure, other IPOs have traded well so far in 2019, including the online scrapbook company Pinterest Inc, vegan burger maker Beyond Meat Inc and video conferencing startup Zoom Video Communications Inc. But these were much less booty than Uber who did not do so many scary collection rounds.
Uber's CEO Dara Khosrowshahi, who was on the NYSE trading floor to mark the debut, tried to reassure investors by pointing to the company's growth prospects and expansion plans.
"My reaction (to the stock price) is if we build and build well, shareholders will be rewarded. We certainly should not measure our success in a day, it is really over the years," Khosrowshahi told Reuters.
The IPO was a water source moment for the decade old company, which was started after the founders struggled to find a cab on a snowy night.
Khosrowshahi was accompanied by a team of Uber officials on the NYSE to celebrate. Co-founder and former CEO Travis Kalanick, who was pulled in 2017 under pressure from investors, was also seen on the trading floor.
MARRED BY SCANDAL
The company's path to the IPO was destroyed by several obstacles, including increased regulation in several countries and struggling with its drivers over pay.
Uber has also weathered controversies, including revelations of a culture of sexism and bullying at Uber and the US Department of Justice investigations. After a series of embarrassment, Kalanick was forced to resign in 2017 by a group of investors. Uber then employed Khosrowshahi to lead the company.
Uber has said it has the potential to grow, not only in the cottage, but also as a "superapp" to deliver logistical services such as grocery and food delivery, organize shipping, and even financial services, just like Grab , the Southeast Asian counterpart.
But market experts have struggled to find value in a company that has consistently incurred losses and warned that it can never be profitable. "The business is unprofitable, new entrants can enter the market, there is potential regulatory risk, and it is very price sensitive. What do you think about this opportunity?" Robert Johnson, Professor of Economics at Heider College of Business, Creighton University in Omaha, Nebraska said.
(Reporting by Joshua Franklin in New York, Aparajita Saxena in Bangalore and Heather Somerville in San Francisco Additional reporting by David Randall in New York and Sweta Singh in Bangalore Editing Saumyadeb Chakrabarty)