Uber begins trading nearly 7% below IPO price
CEO Dara Khosrowshahi tried to manage expectations for the first day of trading.
Uber has begun trading as a public company at 42 US dollars (£32) per share, nearly 7% below its initial public offering price, on an already volatile day for the markets.
The ride-hailing giant sold shares in the IPO at 45 dollars (£34.50) each, raising 8.1 billion dollars (£6.2 billion) and giving the company a valuation of 82 billion dollars (£62 billion).
Shares began trading about two-and-a-half hours after the markets opened on Friday, with investors already feeling jittery over an escalating trade dispute with China.
Today is only one day. I want this day to go great, but it's about what we build in the next three to five years Dara Khosrowshahi , Uber CEO
CEO Dara Khosrowshahi tried to manage expectations for the first day of trading, telling CNBC that Uber investors are in it for the long ride.
He said: “Today is only one day. I want this day to go great, but it’s about what we build in the next three to five years. And I feel plenty of pressure to build over that timeframe.”
Mr Khosrowshahi said Uber is dealing with a potential 12 trillion dollar market so “it makes sense to lean forward”.
Mr Khosrowshahi and other company officials stood on a balcony above the New York Stock Exchange earlier in the morning and clapped as the bell rang to signal the start of the day’s trading.
The IPO price on Thursday came in at the lower end of Uber’s targeted price range. The caution may have been driven by escalating doubts about the ability of ride-hailing services to make money since Uber’s main rival, Lyft, went public six weeks ago.
Jitters about an intensifying US trade war with China have also contributed to the caution. All major indexes were down at least 1% on Friday after the two countries failed to reach a deal before the tariff deadline.
SharesPost principal analyst Alejandro Ortiz said the timing for Uber to start trading was bad given the uncertainty over the trade spat with China. But Uber’s story cannot be just one day of trading because of its potential to make billions in a growing ride market, he said.
“It’s going to keep bouncing around for months to come,” Mr Ortiz said. “It’s an important thing to consider if you’re an investor and you saw value in the company and its disruptive potential, nothing has really changed in the past 48 hours.”
The true story of Uber will come with quarterly earnings reports and at the end of the six-month lockup period in which original IPO investors are prohibited from selling their shares, Mr Ortiz said.
Austin Geidt, one of Uber’s first employees, rang the opening bell. She joined the company nine years ago and is now head of strategy for the Advanced Technologies Group, working on autonomous vehicles. Over the years, she helped to lead its expansion in hundreds of new cities and countries.
Both Uber co-founders Travis Kalanick and Garrett Camp were present at the exchange but absent from the podium during the bell ringing.
A black Uber logo was hanging over the exchange floor and bright green Uber Eats trucks were parked outside. Men in black T-shirts and hats with the Uber Eats logo handed out drinks and snacks on the trading floor.
No matter how Uber’s stock swings on Friday, the IPO has to be considered a triumph for the company most closely associated with an industry that has changed the way millions of people get around. That while also transforming the way millions of more people earn a living in the gig economy.