Last month, Uber hoped the public markets would value it at $100 billion. Investment bankers wanted even more.
Your Uber IPO has arrived.
The San Francisco–based ride-hailing company started trading on the New York Stock Exchange on Friday at $42, below the $45 IPO price that had put Uber’s value above $80 billion. Shortly after opening, Uber’s market cap fell to roughly $72 billion.
Uber closed at a lower $41.57 on Friday.
While Uber remains one of the largest IPOs in history, it is still not what the company hoped for. Uber told investors as recently as last month it could be valued as high as $100 billion. And its last private funding round valued the company at $76 billion.
The IPO caps a turbulent period for Uber. Its founder and CEO, Travis Kalanick, stepped down in June 2017 amid chaos after a former employee exposed its toxic work culture and further reports showed it played fast and loose with the law. The episodes tested how far a CEO could push the Silicon Valley ethos that values skirting the rules in order to grow. Ultimately, Kalanick pushed too hard and gave way to Dara Khosrowshahi. The company’s new, soft-spoken CEO, who previously ran Expedia, has stabilized the company enough to bring it to the public markets, although issues with drivers remain unresolved, with many protesting around the world for fair pay earlier this week.
Brendan Sexton, executive director of the Independent Drivers Guild, said in a statement, “As Uber’s wealthy investors get wealthier today, remember that most of the drivers who built the company are still making poverty wages, often far less than minimum wage.”
With the IPO out of the way, Uber’s biggest challenges lie ahead. The company lost $1.8 billion in 2018, and many doubt its business model can work as long as it relies on human drivers. A driverless future, meanwhile, seems further off than initially anticipated.
Underlining the challenges ahead, Uber’s main competitor, Lyft, lost $1.14 billion in the first quarter of this year alone. Lyft is trading well below its opening price of $72, currently at approximately $55. Uber hopes to avoid a similar fate.