# 'White knuckle' territory: Uber goes from bad to worse on day two



## Who is John Galt? (Sep 28, 2016)

*Uber Is One of the Worst Performing IPOs Ever*










NEW YORK, NEW YORK - MAY 10: 
Uber CEO Dara Khosrowshahi walks outside of the New York Stock Exchange (NYSE) before ringing the Opening Bell at the NYSE as the ride-hailing company Uber makes its highly anticipated initial public offering (IPO) on May 10, 2019 in New York City. Uber will start trading on the New York Stock Exchange after raising $8.1 billion in the biggest U.S. IPO in five years.Thousands of Uber and other app based drivers protested around the country on Wednesday to demand better pay and working conditions including sick leave, over time and a minimum wage. (Photo by Spencer Platt/Getty Images)

By Lucinda Shen May 11, 2019

Plenty of people thought Uber was going to make history-just not this kind.

Shares of Uber stalled on their first day of trading Friday, falling 7.6% to just under $42 amid mounting trade war tensions.

And, according to noted IPO watcher Jay Ritter of the University of Florida, on a dollar basis, investors who purchased the 180 million shares offered through the IPO at $45 per share collectively logged $618 million in paper losses Friday. That represents the worst dollar losses for a U.S. IPO going back through 1975, excluding foreign stock listing in the country via American Depository Shares.

In terms of the share price drop, Uber's IPO ranks as the ninth worst first day performer of all time, according to DealLogic.

That puts further pressure on investors including Saudi Arabia's sovereign wealth fund, who bought in at a time when shares were higher than $45.

The sell off came as President Donald Trump escalated the trade war with China, boosting tariffs on some $200 billion worth of goods from 10% to 25% Friday. Investors have also been somewhat jittery about Uber, after its rival, Lyft, also had a lackluster IPO. Shares of the latter firm are down 35% since their debut in April.

First day trading doesn't determine a company's future, however. (Remember Facebook's flop?) And while IPOs are often priced to "pop" on the first day, critics of the practice argue that it leaves cash on the table-cash that investors were willing to pay, but the company ultimately did not take to grow its business.

Regardless, this probably is not the kind of history the transformative company hoped to make on its first day as a public company.

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## Bubsie (Oct 19, 2017)

"That puts further pressure on investors including Saudi Arabia’s sovereign wealth fund, who bought in at a time when shares were higher than $45."

Suck shit you murdering ****s.


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## Trek Shuffler (Feb 13, 2019)

I never get tired of reading that.


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## Pax Collector (Feb 18, 2018)

Another I Pee Oh flushed down the shitter.


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## Hugh G (Sep 22, 2016)

*Uber IPO fallout hits its biggest investor, Japanese telco SoftBank*










*By Colin Kruger*
May 13, 2019 - 5.22pm
https://www.brisbanetimes.com.au/bu...-japanese-telco-softbank-20190513-p51mv1.html
*The Uber hangover began in earnest for its investors on Monday with Japanese telco SoftBank Group shares down as much as $US9 billion in market value thanks to its major investment in the ride share group's IPO flop last Friday.*

It is one of many investors saddled with losses after Uber, which was valued at $US82 billion ($118 billion) ahead of the IPO - well down on expectations of a $US100 billion listing - ended its first day with a valuation below $US70 billion.


SoftBank, run by chief executive Masayoshi Son, was down $US9 billion on its investment in Uber on Friday.Credit:Bloomberg

SoftBank, run by chief executive  Masayoshi Son, has a 15 per cent stake in Uber.

Uber's flop will have implications for some high-profile new economy listings, such as Slack Technologies and WeWork, that were hoping to follow it onto the public stage this year.

Dara Khosrowshahi, Uber's chief executive, said trade tensions between the United States and China played a role in the weak performance.

"You can't pick when you go public," Mr Khosrowshahi said.

Len Sherman, a professor at Columbia Business School, said Uber provided enough financial information in the run-up to the IPO for investors to know what they're buying into.

"The market has reacted negatively to a shared reality that both Lyft and Uber are struggling with a fundamentally broken business model," he said. *"Uber has lost more money faster than any startup in history, with no clear path to profitability."*

It is a view shared by prominent local investors such as Hamish Douglass who has previously described Uber as akin to a ponzi scheme and labelled it "one of the stupidest businesses in history".

Another Australian fund manager Roger Montgomery was equally critical about Uber ahead of its IPO.

"I see Uber as one of the stupidest businesses in history," said Magellan Financial Group CEO Hamish Douglass.Credit:Wayne Taylor

He said some of the unconventional metrics Uber has asked the market to use as a lense on its results echo the the same metrics analysts were using back in 1999 to "justify the patently absurd valuations the market was willing to attribute to loss-making companies".

"The reality is that Uber doesn't make an economic return to its shareholders on the technology it has built nor on the quarterly operational costs. Therefore, its service isn't priced correctly," Mr Montgomery said.

"In turn, *its popularity is at least partly due to it being underpriced. If it were priced to generate a profit, the ride hailing service would be far less popular."

With Bloomberg*


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## Who is John Galt? (Sep 28, 2016)

Thanks Hugh. I love Hamish Douglass's quotes of 2 years ago, May 2017, and have them printed and framed above a desk.

_"I see Uber as one of the stupidest businesses in history," Mr Douglass said. "The probability of this business not going bankrupt in a decade is like 1 per cent."

Pointing to Uber's high-cost, owner-driver model and what he described as its almost "valueless" user base, Mr Douglass said the San Francisco-based business' capital-raising style was like a "Ponzi scheme"._


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## Hugh G (Sep 22, 2016)

*'White knuckle' territory: Uber goes from bad to worse on day two*


*By Esha Dey*
May 14, 2019 - 7.21am
https://www.brisbanetimes.com.au/bu...-bad-to-worse-on-day-two-20190514-p51mz9.html

With Uber's shares plunging nearly 20 per cent below its IPO price on Monday, the stock might be fast approaching a "white knuckle" territory, according to one Wall Street analyst.


Uber chief Dara Khosrowshahi warned staff in an email that the company was facing "another tough day in the market."Credit:Bloomberg

After closing down 7.6 per cent on Friday in its trading debut, Uber's stock dropped as much as 13 per cent on Monday in New York, before closing down 11 per cent at $US37.10. The initial public offering was priced at $US45.

"From a stock perspective, if Uber breaks $US35, that is where it starts to get even more white knuckles," Wedbush analyst Daniel Ives said in a phone interview.

"Right now the bears are winning, and there is nothing to stop these stocks from moving down, especially in a risk-off environment," the analyst added, noting the weakness in ride-sharing peer Lyft, which is also down as much as 7.3 per cent.

While there are plenty of skeptics when it comes to the ride-hailing and ride-sharing economy, the broader market sell-off amid escalating trade tensions between US and China is also weighing further on the valuation of the two companies.

Uber CEO Dara Khosrowshahi told staff on Monday that it was "another tough day in the market," and warned of a weak showing.

"Uber and Lyft are caught in a perfect storm of China-trade related market choppiness, combined with worries around no profitability in sight, and a valuation knife-fight between the bulls and the bears," Wedbush's Ives said, noting that Uber's IPO was initially expected to be a positive catalyst for Lyft.

"Once it ultimately became the opposite, it became a field day for the shorts," he said.

The staggering proportion of bearish bets in Lyft has already become a cause of concern for investors. The stock currently has nearly 62 per cent of its free float held short, according to S3 Partners.

Falling to $US35 would mean a more than 22 per cent discount to Uber's IPO price of $US45. The stock was seeing heavy trading on its second session as a public company.

According to Bloomberg data, the total value of Uber shares traded on Monday was $US2.8 billion, surpassed only by behemoths such as Apple, Amazon, Microsoft and Facebook.

*Bloomberg*


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## Krusty (Jan 26, 2018)

So what happens now, do we still have to keep picking bastards up or what?, is this nightmare finally over?, can I go home now?.


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## Who is John Galt? (Sep 28, 2016)

Krusty said:


> So what happens now, do we still have to keep picking bastards up or what?, is this nightmare finally over?, can I go home now?.


This could be about the right time to register the rideshare names KrÜber and KrÜster.

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## WestSydGuy (Jun 7, 2018)

39.96 USD +2.86 (7.71%) now... perhaps this is a dead cat bounce?


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## everythingsuber (Sep 29, 2015)

WestSydGuy said:


> 39.96 USD +2.86 (7.71%) now... perhaps this is a dead cat bounce?


Nup This is the banks underwriting Uber propping it up. Maybe can do it for a day or 3 but then we'll see what happens next.?

Cats run over by trucks don't bounce.


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## RoboRider (Aug 26, 2018)

WestSydGuy said:


> 39.96 USD +2.86 (7.71%) now... perhaps this is a dead cat bounce?


Could also be that the price was depressed by a large volume of sellers who just wanted to get whatever money they could and run. Not sure what the restrictions on selling from existing stock holders was. I would assume all staff who got performance/bonus shares would be locked up for 6 months but sometimes earlier investors are locked for a period as well. If they weren't that would certainly increase the selling pressure.


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## Jack Malarkey (Jan 11, 2016)

In the United States, stock and other assets sold within 12 months are taxed at the same rate as ordinary income whereas long-term capital gains are taxed at concessional rates of 0%, 15% or 20%. See https://www.investopedia.com/articl...gterm-vs-shortterm-capital-gain-tax-rates.asp.

I suspect this will be causing some lock-in. It will be interesting to see what happens in 12 months.

Of course, capital gains tax is payable only if you make a capital gain rather than a capital loss.


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## everythingsuber (Sep 29, 2015)

Just a thought. Lyfts 6 month lock out will end about a month before Ubers.
There's possibly that Uber shareholders may get very nervous about that?


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