Uber tumbles 9per cent in rocky stock market debut

Uber tumbles 9per cent in rocky stock market debut

Uber Technologies Inc's stock on Friday opened down 6.7 percent in its first trade on the New York Stock Exchange, in the most high-profile U.S. market debut since Facebook Inc seven years ago.

Traders gather at post where Uber Technologies Inc. holds IPO on floor of NYSE in New York
Traders gather at post where Uber Technologies Inc. holds it's IPO on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 10, 2019. REUTERS/Brendan McDermid

REUTERS: Uber Technologies Inc's shares fell nearly 9per cent in their debut on Friday, marking a rocky start to one of the most high-profile U.S. initial public offerings since Facebook Inc's seven years ago.

The stock's opening at US$42 undermined Uber's strategy to price its oversubscribed IPO conservatively at US$45 per share to avoid a repeat of rival Lyft Inc's stock market struggles following a strong debut in March.

The lackluster market response comes against the backdrop of a spike in trade tensions between the United States and China and increased investor skepticism about the company's ability to turn profitable soon enough.

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.

Led by Chief Executive Officer Dara Khosrowshahi, a team of Uber officials were on the NYSE trading floor to mark the start of the day's trading. Co-founder and former CEO Travis Kalanick, who resigned in 2017 under pressure from investors, was also on seen on the trading floor.

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

Uber has said that it has the potential to grow not just in the cab hailing business, but also as a "superapp" to provide a variety of logistic services, such as grocery and food delivery, organizing freight transportation, and even financial services, much like Grab, its Southeast Asian counterpart.

As a private company, Uber has raised more than US$15 billion from investors to fuel its growth and expansion into food delivery and freight hauling, with little regard for turning a profit. Uber reported a loss of US$3.03 billion in 2018 from operations.

But as a public company, it will have to deal with quarterly earnings reports and demands from shareholders to plot a path to profitability.

The company weathered controversies including the unearthing of a culture of sexism and bullying at Uber to a U.S. Department of Justice federal investigation, which culminated in the resignation of Kalanick.

(Reporting by Aparajita Saxena, Joshua Franklin; Editing by Saumyadeb Chakrabarty)

Source: Reuters