Uber CEO Dara Khosrowshahi talks to traders on the New York Stock Exchange after ringing the opening bell on the first day of trade for the ride-hailing giant (Johannes EISELE)
New York (AFP) – Uber shares went into a fresh skid Monday — more bad news for the global ride-hailing giant, which endured steep declines in its hotly anticipated market debut last week.
Shares in Uber tumbled more than 11 percent to $36.96 mid-afternoon on the second day of trade on the New York Stock Exchange.
Valued at some $82 billion in one of the biggest initial public offerings (IPOs) in the technology sector, Uber’s debut Friday was a major disappointment, losing 7.6 percent.
Uber chief executive Dara Khosrowshahi urged employees to look past the rough patch of road on Wall Street and stay focused on better days ahead, according to a copy of an internal email obtained by AFP.
“Remember that the Facebook and Amazon post-IPO trading was incredibly difficult for those companies,” Khosrowshahi said in the message.
“And look at how they have delivered since. Our road will be the same.”
He noted that Monday was a tough day for the stock market overall, not just for the San Francisco-based ride-share company with visions of becoming the “Amazon of transportation.”
Khosrowshahi acknowledged that there were versions of Uber’s future in which the company does not prosper as hoped, but warned against being distracted by pessimistic voices in the market.
“Sentiment does not change overnight, and I expect some tough public market times over the coming months,” he said in the email.
“We will be judged long-term on our performance, and I welcome that.”
– Troubled road ahead –
Richard Windsor, an analyst who writes the Radio Free Mobile blog on technology, said Uber and Lyft have been pressured by their high valuations and intense competition.
Uber and Lyft “are currently engaged in a life or death struggle to become the dominant ridesharing platform in the USA,” Windsor said.
“It is this reality combined with the very high valuations at which they have been listed that is putting the pressure on these companies.”
Lyft shares fell six percent to $47.87, and have given back some 30 percent since the company’s market debut in late March.
Daniel Ives of Wedbush Securities said he expected the “valuation digestion process” to take some time and that he remained upbeat on Uber even if it will take three to four years to reach profitability and despite competition with Lyft.
“We believe there is a large enough ocean for two boats as the ridesharing market domestically in the US is roughly $1.2 trillion and $5.7 trillion globally,” Ives said.
“We expect ridership, drivers, and the monetization opportunities for Uber to increase markedly over the coming years. A core tenet of our bull thesis on Uber is around the company’s ability to morph its unrivaled ridesharing platform into a broader consumer engine.”
Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.