Uber’s IPO is officially a bust.
The ride-hail giant finished its first day of trading on the New York Stock Exchange down nearly 8 percent — making it the worst IPO for a marque name in at least a decade.
After pricing its shares at $45 a share Thursday, Uber’s stock quickly opened down 7 percent at $42 a share. It then ended the day even lower — down 7.6 percent to $41.57 a share.
“It was a bad deal,” one New York Stock Exchange veteran said of the IPO. “It’s probably the worst IPO of its size.”
Initially, Uber’s CEO Dara Khosrowshahi and market experts blamed the drop on the overall market decline amid fears of a US-China trade war.
But that theory went by the wayside when the S&P 500 jumped 2 percent and Uber continued to decline — falling as low as $41.41 at one point.
The 7.6 percent drop makes Uber — a household name around the globe — the fourth worst IPO this decade, according to Bloomberg. Making matters worse, other than Zynga, none of the other poorly performing companies were marquee names.
Uber, by contrast, is the most anticipated IPO debut since Facebook seven years ago.
“The sound you hear of the stock dropping is the sound of the bubble bursting for high valuations in the private markets,” said Kathleen Smith, principal at IPO-focused ETF manager Renaissance Capital.
Indeed, Uber was valued as high as $120 billion following a big private funding round last year. It’s current stock price gives it a valuation of $76 billion, roughly what it was appraised at following a more recent private fund-raising round in August.
The San Francisco-based company, which is trading under the symbol “UBER,” had been hoping to be valued at closer to $91 billion when it set its initial IPO price range between $44 and $50 a share, according to regulatory filings.
Part of the problem is that Uber continues to lose money, including a $1.8 billion loss in 2018, down from a loss of $2.2 billion the previous year.
“In the private world they’ve been showered with money, but the public world is having a hard time figuring out what their valuation is,” Smith said. “With a big money-losing company like this, it’s been very hard to have a lot of confidence in what it’s worth.”
Watching the stock crash from the NYSE trading floor Friday was former CEO Travis Kalanick, who was barred from participating in the opening-bell ceremony by current CEO Khosrowshahi, according to a New York Times report.
Kalanick, who could be seen on a separate balcony with his father, was ousted from Uber in 2017 on the heels of escalating scandals, including allegations of sexual harassment and discrimination.
The sad opening is a major bust for Morgan Stanley, whose lead banker, Michael Grimes, competed fiercely for Uber’s business, including by working part-time as an Uber driver, according to reports.
Morgan Stanley is potentially losing out on millions of dollars in fees it could have gotten selling another tranche of 27 million shares, dubbed the “shoe,” that would have been made available if the stock rose high enough, according to the NYSE vet.
The bust also means investors like Kalanick, who stood to sell as much as $168 million to fund Morgan Stanley’s “shoe,” now have to wait months due to lockup agreements, according to Bloomberg.