Uber prices blockbuster IPO conservatively to raise $8.1 billion

Uber protest

Protests against Uber in London this week Credit Reuters

Uber set its debut stock price toward the bottom of its range at $45 per share.

Uber considered going public for at least four years. The lack of positive excitement for the biggest listing of a US technology company since Facebook in 2012 suggests investors are becoming more choosy. The company is hoping to avoid the tumultuous first weeks of trading in rival Lyft Inc., whose shares fell below its $72 IPO price within days of listing and closed 23 percent below that price Thursday. Lyft's bad luck in the market could be one of the reasons why Uber priced its IPO conservatively. The company has seen steep losses since its listing on the exchange. The company gave a 30-day option to buy up to 27 million shares.

The IPO pricing was a balancing act for Uber's team of underwriting banks, led by Morgan Stanley, Goldman Sachs & Co 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.

The US taxi hailing company will list on the New York Stock Exchange under the ticker UBER having raised $8.1bn at the lower end of its fundraising target.

Uber's stock was trading at about three per cent lower than its IPO price Friday afternoon.

Still, the world's largest ride-hailing company appeared to generate more interest from mom-and-pop investors than Lyft. As of writing, Lyft is trading at just $52.27 from a high of more than $78.

Uber had already lowered its valuation expectations twice in the last two months to address investor concerns over its mounting losses.

Uber is yet to make a profit and warned recently it may never do so.

In distributing the stock, Uber prioritized shareholders - particularly institutional investors - that it thinks will hold on to the shares for a long time.

To be sure, other IPOs have traded well so far in 2019, including online scrapbook company Pinterest Inc, vegan burger maker Beyond Meat Inc and video-conferencing startup Zoom Video Communications Inc. "We're certainly not measuring our success over a day, it really is over the years", Khosrowshahi told Reuters.

The company's road to IPO was marred by several hurdles including increased regulations 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 to a U.S. Department of Justice federal investigation, which culminated in the resignation of CEO Travis Kalanick. After a series of embarrassments, Kalanick was forced to resign in 2017 by a group of investors. Uber eventually hired Dara Khosrowshahi as CEO. Uber's revenue a year ago surged 42% to $11.3 billion while its cars completed 5.2 billion trips around the world either giving rides to 91 million passengers or delivering food. Profitable firms may not have to worry too much about finding a market for their stock.

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