Uber Technologies Inc. opened lower on Monday, as the closely watched company continues its rocky debut on public markets. Shares of the ride-hailing app company fell 8.6% to $38 in the morning of its second day of trading.
The company’s IPO price was set at $45 apiece, priced near the low end of its target range, but slipped on its first day of trading Friday, closing at $41.57. The company had a valuation of roughly $76 billion as of Friday trading.
Uber’s launch may have been ill-timed given the broad stock market slide as investors shuddered at the trade row between the U.S. and China. In addition, as competition heats up across the globe, Uber now must contend with cash-infused rivals pushing deals to woo riders and drivers, and losing market share in some major markets.
The tepid investor response reflects muted expectations that Uber will be “an overnight success story,” Wedbush Securities analysts said in a note. Investors are going to need some time to digest how Uber fares with competitors, its strategic vision around UberEats and Freight, and its autonomous ambitions, the analysts said.
“We expect Uber to be operating at a loss for at least the next few years, but believe investors should be more patient with Uber’s investments as its leadership position will help lead to better long-term competitive positioning for this tech juggernaut,” the analysts said.
Investors also have been eyeing Uber’s chief rival, Lyft Inc., which went public in March, for direction. Lyft’s stock also has been punished since it market debut, trading Monday at a 32% discount to its IPO price of $72 a share. The stock tumbled more than 6% in morning trading.
Uber, which was founded in 2009, broke private financing records, changed the way the world thinks about transportation and rewrote the startup playbook.
The company’s history has also been mired by troubles on its road to IPO. Its co-founder Travis Kalanick was pushed out as chief executive in 2017 after scandals at the company, including allegations of sexual harassment and discrimination, as well as regulatory issues with governments across the globe. Dara Khosrowshahi took the helm shortly thereafter to help steer the company toward public markets.
But the onslaught of competition as well as subsidies for its drivers helped inflate Uber’s loss to more than $3.7 billion for the 12 months ended in March, by far the biggest loss by a U.S. startup in the year before an IPO, according to S&P Global Market Intelligence. Uber’s revenue growth has also flatlined, a problem for a company that pitched itself as one defined by growth.