Uber stock is taking a beating today, down almost ten percent, in its second day of trading on the New York Stock Exchange.
Uber Stock Continues Its IPO Slide
Shares of Uber fell as much as ten percent on Monday in the company's second day of trading on the New York Stock Exchange after it's lackluster IPO last Friday made it the worst performing IPO in New York Stock Exchange history in terms of first-day dollar loss.
The poor IPO performance of the stock on Friday erased $655 million of investor wealth, putting the public valuation of the company at $75.5 billion, well below the $120 billion that was speculated just months ago. Initially offered at $45 a share, which was on the very low end of the proposed price range of $44 to $50 a share, the stock closed out Friday at $41.70.
After the opening bell, Uber's stock continued to fall, reaching as low as $37.17 at one point, as it hit a perfect storm of investor skepticism and broader market anxieties about the ongoing trade war between the United States and China.
"While it might be easy to call out 'market conditions' for these failings," wrote Nicholas Colas, a co-founder of DataTrek Research, in a message to clients on Monday about the decline in Uber and Lyft stocks, "the unvarnished truth is that these declines represent a fundamental disconnect between public and private valuations."
Uber, as well as ride-share competitor Lyft, have both struggled to demonstrate that their business model can be profitable. As they look to lower their driver-related costs, drivers are already expressing major dissatisfaction with the company's cut of their fares to the point where drivers in major markets have loudly protested ahead of both companies' IPOs.
"The current narrative relating to the social economic nature of the ride-hailing segment is negatively having an impact on the shares of both Uber and Lyft," said analyst Lenny Zephirin of the Zephirin Group.
D.A. Davidson, an analyst with Tom White, said: “in the last couple of weeks we have noticed investors questioning more about how good of a business model is ride sharing really.”
Not everybody is pessimistic about the ride-sharing services future outlook though. Wedbush's Ygal Arounian said that investors needed to stick it out while Uber moves towards a firmer financial position across its various services. "While it will take time for the stock to settle and Uber must execute flawlessly over the coming 12 to 18 months, we believe a $100 billion+ market cap is warranted," Arounian said.