Investors hit as Uber takes a wrong turn
WALL Street’s biggest technology flotation for half a decade started off on the wrong foot as Uber shares tumbled almost 8pc below their offer price yesterday.
The stock closed at $41.57, down from the $45 per share that had valued Uber at $82bn (£63bn).
This meant an instant loss for those who invested just before the listing. The fall left the taxi-hailing firm with a valuation below $70bn.
A first day drop is unusual as bankers typically underprice share offerings to engineer a “pop” that rewards institutional investors and generates a feel-good factor.
However, market jitters over a potential Us-china trade war and the dismal performance of Uber’s key rival Lyft put off buyers. Uber went public at the end of the worst week of the year for US markets, and three days after Lyft had delivered disappointing first-quarter results. The drop put a damper on the most anticipated US float since Alibaba’s record-setting debut in 2014.
Uber, whose app allows users to hail a cab driver in minutes and which has a growing food delivery business, is the superstar among a series of US listings this year that includes Lyft and Pinterest, as well as potentially Wework and Airbnb.
Executives including Dara Khosrowshahi, the Uber chief, opened trading on the New York Stock Exchange with Austin Geidt, one of Uber’s first employees, ringing the opening bell. Travis Kalanick, the scandal-hit founder, wasn’t invited, but arrived on the trade floor.