Uber debuts on Wall Street while Dow Jones is down
The ridesharing company debuts on Wall Street as the Dow Jones tumbles.
Uber’s IPO is set to launch on Wall Street after pricing its stock at $45 a share and under the stock symbol 'UBER'. Though the share price is $45, Uber stock's first trade was at $42. The ridesharing company is valued at $75 billion and will raise $8 billion. Uber's IPO debuts as the Dow Jones is down with US tariffs rising on Chinese made goods. Uber's IPO is set to be the largest since social media giant Facebook went public in 2012.
Will Uber’s IPO live up to the hype?
Uber’s IPO will be watched closely as rival Lyft's stock has plummeted since its debut. Uber chief executive officer(CEO), Dara Khosrowshahi, said that Uber’s share price may build slowly like Amazon’s stock after its debut in 1997.
‘So a lot of private companies now are holding off much longer before they go public. We are much bigger, much more mature as a company as we go public, and if you do look at the growth rates, our audience is growing 33% on a year on year basis, transactions are growing 36%,’ said Khosrowshahi.
Because of the diminished Lyft share price, Uber’s large reported losses, and current Wall Street volatility, Uber’s stock will face a great amount of unpredictability.
What's next for Uber's IPO?
Kathleen Smith, principal of Renaissance Capital, noted that the ridesharing company still has to control costs before it’s profitable as a unicorn IPO.
‘It's amazing what [Uber has] built, but they are still not done doing it. They've been subsidising the business,’ said Smith.
Analysts at Bernstein Research see investors that are bullish and bearish on Uber stock both have valid arguments.
‘Bulls on mobility services can claim almost limitless potential for penetration upside,’ said Bernstein analysts.
However, bearish investors can make a claim against Uber as well, according to Bernstein analysts.
‘Uber and Lyft each took almost a decade to get to their present scale, are seeing growth slow, and incinerate cash at impressive rates while showing modest operating leverage,’ noted the analysts.
Since Uber’s IPO had a less-than-stellar debut on Wall Street, Uber’s IPO is going to be further analysed to see if its share price will improve over time.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Looking for an IPO opportunity?
Uber is expected to launch its IPO in 2019. Find out what the valuation could be when it arrives on the stock market, as well as how you could trade it.
Live prices on most popular markets
- Forex
- Shares
- Indices
