Published: Sat, May 11, 2019
Markets | By Otis Pena

Uber shares fall on stock market debut

Uber shares fall on stock market debut

Uber shares are due to begin trading on the New York Stock Exchange Friday, under the ticker UBER.

Despite all that, Uber's IPO is the biggest since Chinese e-commerce giant Alibaba Group debuted with a value of $167.6 billion in 2014. And of course earlier investors are still going to make small fortunes.

The IPO pricing is a balancing act for Uber's team of underwriting banks, led by Morgan Stanley, Goldman Sachs and Bank of America Merrill Lynch, to negotiate a good price while leaving some upside to ensure the stock trades up on its market debut.

Picking the right number helps ensure that the stock has a stable start to trading: The price goes up, but not enough to worry investors into thinking that more money should have been raised. But even if the stock market had been doing great today and Lyft's IPO hadn't been a low-level disaster, Uber would still kind of suck. "We're certainly not measuring our success over a day, it really is over the years", Khosrowshahi told Reuters. Uber has never made a profit and warned investors in its prospectus that it doesn't know if it ever will.

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The IPO marks a landmark moment for the decade-old company, which was started after its founders struggled to find a cab on a snowy night and grown into the world's largest ride-hailing company, making more than 10 billion trips. Uber eventually hired Dara Khosrowshahi as CEO. Founder Travis Kalanick (left), who was ousted as CEO in 2017 over pressure from investors, was spotted on the trading floor with his father in his first public appearance in months - though did not take part in the bell ringing ceremony.

The company's road to IPO was marred by several hurdles including increased regulation in several countries and fights with its drivers over wages.

The company weathered controversies including the unearthing of a culture of sexism and bullying at Uber and a US Department of Justice investigation, which culminated in the resignation of Kalanick. As well as the original ride-hailing business, Uber is developing driverless cars and has a food delivery operation, Uber Eats. What's more, some Uber drivers have been accused of assaulting passengers, and one of its self-driving test vehicles struck and killed a pedestrian in Arizona a year ago while a backup driver was behind the wheel. "If you buy, you are buying a bull market, not a company", he added. "What is there to like about this opportunity?"

Arun Sundararajan, a professor at New York University's business school, said that while going public will give Uber money to capture more of the transportation market, it could also push it to put quarterly targets ahead of its broader ambitions.

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