Uber lost $ 2 billion in market capitalization overnight as the lock-up period ended on its first public offering on Wednesday and shares in the trip share company flooded the market.
That brought the share back to $ 25.58, a 43 percent decrease from the IPO price of the share-based ride share company, which was a record high for the trouble-free startup and the moderate income reported earlier this week.
Normally, the lockout period – which prevented early investors and employees of the company from selling their shares – would have signaled an opportunity to sell and get cash for equity.
Uber's lock-up on early investors expired and caused a massive sell-out that caused its market capitalization to lose $ 2 billion overnight before the opening bell on the New York Stock Exchange Thursday (photo)
Uber's stock fell to $ 25.58, a 43 percent decrease from the IPO price of the share-based ride-share company when the lock-up expired, which was a record low. Shares in the startup were at $ 26.94 before the trading started Thursday
But Uber has dropped dramatically from its May IPO of $ 45, with a market valuation of $ 82 billion. And it was clear before the sale that the stock performance of the company had become a disappointment, reports The Wall Street Journal.
About 130 million shares were traded on Wednesday, far more than the 65-day daily average of 11 million, Jay Ritter, an expert in corporate finance and IPO at the University of Florida.
The higher trading volume was also not typical of what follows a lock-up, Ritter said. It was not known how many of the shares were sold for the first time, because the trade restriction no longer applied.
An Uber spokesperson was not immediately available when DailyMail.com contacted. Uber was traded on the New York Stock Exchange for $ 26.94 prior to Wednesday's opening.
Wedbush Securities estimates that 763 million shares of Uber shares became available on Wednesday, the Journal reports, and that of those 500 million to 520 million were probably under water.
Uber had attracted investors since 2015 at stock prices that were considerably higher than the trading price on Wednesday. It was predicted that about 25% or 190 million unlocked shares would be available on Wednesday, Wedbush analyst Daniel Ives told the Journal.
Loss of money Uber also had to deal with the consequences of a faint income report earlier this week.
The San Francisco-based company lost $ 1.16 billion in the third quarter and caused a series of losses. The third quarter loss included $ 401 million in share-based compensation in relation to the IPO.
The loss amounted to 68 cents per share and was greater than the $ 986 million deficit in the same period last year.
However, the loss per share in the last quarter was smaller than what Wall Street had expected. Analysts predicted a loss of 82 cents per share, according to FactSet.
Uber has accelerated the pace of its sales growth and raised $ 3.81 billion in the third quarter, 30% more than in the same period last year. That exceeded expectations for $ 3.63 billion in the quarter.
In the last quarter, sales increased by 14% compared to the previous year.
Despite the rapid growth, according to analysts, Uber has lost around $ 2 billion a year.
As the losses continue to increase, the start-up still expects to be profitable in about two years.
CEO Dara Khosrowshahi said Monday that the company's goal is to achieve profitability – after adjusting for interest, taxes, depreciation and amortization – for the full year of 2021.
& # 39; We hope we have shown you that we can not only ensure revenue growth, but also revenue growth with discipline & # 39 ;, said Khosrowshahi during a conference call with investors.
& # 39; We can only do this with the real, really hard work of all our employees on a global basis, and also with the partnership of the cities we work with and our drivers & # 39 ;.
Uber has found success convincing more people to go beyond the core activities of app-based ride shares (photo) with a range of other products.
Uber has found success convincing more people to go beyond its core business with ride shares with a range of products, including food delivery.
The number of monthly active consumers on all its platforms grew to 103 million, an increase of 26 percent over the same time last year, but below the 104.4 million that analysts expected under FactSet.
Gross bookings grew to $ 16.5 billion, which was 29 percent more than in the same period last year, but lower than the $ 16.7 billion that analysts expected under FactSet.
Last month executives at competitor Lyft said they expect the rival ride-share company to become profitable in the fourth quarter of 2021.
Khosrowshahi gave some details about how different units within Uber would change for the company to achieve its new profitability goal.
& # 39; Although we will of course continue to invest in the growth and power of our platform, especially in some of our newer high-potential companies, such as Eats, we remain well-considered capital stewards, make difficult decisions where needed and every dollar investment counts, & Khosrowshahi said.
CEO Dara Khosrowshahi (photo) said Monday that Uber's goal is to achieve profitability – if adjusted for interest, taxes, depreciation and amortization – for the full year of 2021
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