Uber IPO Falls Flat On Wall Street; Shares Finish First Day At $41.57
SAN FRANCISCO (CBS SF/AP) -- Bay Area-based ridesharing Uber's first public offering on Wall Street Friday fell flat with shares selling for $41.57 a share and finished the day below the share value of its major rival Lyft.
As the stock price tumbled, trading in Uber stock had yet to begin at 8:30 a.m. PDT -- two hours into Wall Street's trading day. The IPO shares were priced at $45 a share overnight, but slipped to $42 by the time trading began at 8:52 a.m.
Shares ended the trading day at $41.57 while its Bay Area rival Lyft saw its shares tumble to $51.09 a share.
Overall, the Dow dropped more than 300 points at the opening as traders were disappointed that the U.S. and China failed to reach a deal on trade before Friday's tariff deadline. Technology and industrial stocks, which would stand to lose the most in a drawn-out trade conflict, had some of the biggest losses.
The Dow did rally late to close with a 113.87 point gain.
CEO Dara Khosrowshahi and other company officials stood on a balcony above the New York Stock Exchange and clapped as the bell rang to signal the start of the day's trading.
The IPO price came in below Uber's targeted price range of $44 to $50 per share. The caution may have been driven by escalating doubts about the ability of ride-hailing services to make money since Uber's main rival, Lyft, went public six weeks ago.
Jitters about an intensifying U.S. trade war with China have also contributed to the caution. Stocks opened broadly lower on Wall Street after the two countries failed to reach a deal before Friday's tariff deadline.
Even at the tamped-down price, Uber now has a market value of $82 billion — five times more than Lyft's.
Before the opening bell, Khosrowshahi tried to manage expectations for the first day of trading.
"Today is only one day. I want this day to go great, but it's about what we build in the next three to five years," he said in an interview with CNBC. "And I feel plenty of pressure to build over that time frame."
Uber, Khosrowshahi said, is dealing with a potential $12 trillion market so "it makes sense to lean forward."
He predicted that younger generations will not want to own cars. "I think more and more you're going to have transportation on demand services, essentially de-bundle the car. They're going to want to push a button and get the transportation they want."
Austin Geidt, one of Uber's first employees, rang the opening bell. She joined the company nine years ago and is now head of strategy for the Advanced Technologies Group, working on autonomous vehicles. Over the years, she helped to lead its expansion in hundreds of new cities and countries.
Both Uber co-founders Travis Kalanick and Garrett Camp were present at the exchange but absent from the podium during the bell ringing.
Meanwhile, scores of Uber drivers say they have been mistreated by the company as they work long hours and wear out their cars picking up passengers as they struggle to make ends meet. On Wednesday, some of them participated in strikes across the United States to highlight their unhappiness ahead of Uber's IPO but barely caused a ripple. A similar strike was organized ahead of Lyft's IPO to the same effect.
In its latest attempt to make amends, Uber disclosed Thursday that it reached a settlement with tens of thousands of drivers who alleged they had been improperly classified as contractors. The company said the settlement covering most of the 60,000 drivers making claims will cost $146 million to $170 million.
