9 ms·

Uber goes into reverse as first day stock price disappoints

leshokunin 7y ago
It's going to be a wild ride. While (*most) people seem to like using Uber, headlines about how the unit economics don't work, how drivers can't make a living, how their working conditions aren't tenable keep popping up. How does Uber intend to address this? In addition, I have questions about the service's ability to grow significant multipliers. It really feels like they've reached the majority of their markets three years ago, and have been tweaking things since. Why would you invest in this? Is there a clear value proposition for future growth?
- behringer 7y ago
  You're investing in driverless cars at this point.
  - munk-a 7y ago
    But not in one of the companies that appears to be well poised to win first entrance into the market. I think it's likely a dark horse will end up being first to market - but I think google will be there pretty soon after - uber's probably going to end up retrofitting any hardware they've developed with the winner's software as a way to scrounge back some of the R&D costs.
  - jressey 7y ago
    I am a bit more cynical and I would say you are investing in paying off the earlier investors.
  - inflatableDodo 7y ago
    Sounds like a euphemism for betting on horses.
    - behringer 7y ago
      That's what the stock market is
- strikelaserclaw 7y ago
  The whole thing is bizarre, who is buying these stocks?
  - r00fus 7y ago
    Institutional investors?
  - chomp 7y ago
    Funds, mostly. Investors who want a large stake of control and see intrinsic value in a TNC outside of the numbers. People who buy into California math. People buying a $42 lottery ticket. ML trading algorithms who have a tensor weighted heavily on "unicorn going public" that ends up equating to "Buy". Family or friends of employees that want to buy so they can "root for the company" (Yes this sounds ridiculous but this happened to a personal friend of mine and his mother still always asks why the stock is down 300% from when she bought it, and when she can expect for it to go up.) There's a lot of reasons why people would buy Uber. But for anyone who is investing safely for retirement, I think it's easy to see that this is not an investable company at the moment.
  - inscionent 7y ago
    Many retirement portfolio managers.
  - sigstoat 7y ago
    not the index funds, unlike what the sibling comments are suggesting. IPOs aren't even added to the indexes until it's been some months since their IPO.
- ProAm 7y ago
  OR how about the super questionable culture of the company and its executives and leadership? Those are such red flags by themselves... This is a horrid company with a horrible past that wouldn't die because of VC money.
  - inflatableDodo 7y ago
    I had a funny discussion about Uber with my uncle. I said I refuse to use it because they are a shitty company who are only cheap because they are using investor money to subsidise the rides on the plan of forcing the other players out of the market. His answer was that the barriers to entry on private car hire are so low that if Uber are doing this as their plan and I dislike them, I should use them as much as possible, as then they will collapse quicker.
    - eridius 7y ago
      Doing exactly what Uber wants isn't how you kill them. They're subsidizing the rides right now, but if everybody followed your uncle's advice, Uber would very quickly "win" the rideshare wars, establish their long-sought-after monopoly, and raise prices.
      - toomuchtodo 7y ago
        Better to support legislation that pushes the minimum wage up for rideshare and taxi drivers in top markets (see: Lyft $17/hr minimum in NYC). Faster death than trying to bleed Uber and Lyft dry through rides (which could take forever depending on investor taste for losses), and full self driving won't arrive anytime soon. Ride the populism wave.
        inflatableDodo 7y ago
        >which could take forever depending on investor taste for losses If the existing investors had much more of a taste for losses, why the IPO?
- zeropnc 7y ago
  Ehm majority of their markets? The entire developing world says hello
- Morialkar 7y ago
  I think they hope to boost their value by going into the self-driving cars/cabs business, how much that will work if up in the air though...
  - mtgx 7y ago
    Full self-driving cars will be unproven/limited to certain very specific areas for a while. And Uber will have to deal with the liability from accidents, too, plus the media storms (and they have enough of those already).
- partiallypro 7y ago
  Is not just Uber, it's LYFT, neither can seem to make a profit. That kind of worries me because both are so convenient and so help people with limited income.
joelbondurant 7y ago
There's a reason IPOs are called exits.
angrydev 7y ago
Facebook's IPO was also off to a rather rough start[1], so I am not putting much stock into what happens in a single day. I have not purchased or plan to purchase any Uber stock, I just think it's important to have perspective on this event. https://en.wikipedia.org/wiki/Initial_public_offering_of_Facebook#Subsequent_days https://en.wikipedia.org/wiki/Initial_public_offering_of_Fac...
- garmaine 7y ago
  As was Google’s.
WheelsAtLarge 7y ago
This can't be a surprise to anyone. Given Lyfts performance, after it's IPO, the fact that UBER is not profitable and really doesn't have a near term plan to be. The stock will continue to struggle. They could follow the Amazon model to profits, get big enough to dominate the niche, but they at least need a profit engine, that would give them cash flow. It would let the company grow without having to continuously have to raise money and keep the stock price stable. Look for the company to continuously raise money or to reduce service. None is good for the stock's future price.
- kahnjw 7y ago
  Can Uber count on being the incumbent the way Amazon did? Amazon built up physical logistics infrastructure and a subscription service that serve as a barrier to entry for competitors. Uber's only real market foothold is a network of drivers, the turnover rate of which is high. To most users, ride shares are a commodity. Savvy user's already check available services prior to booking.
  - deleted 7y ago
    [deleted]
Waterluvian 7y ago
So I'm kinda dumb when it comes to the stock market. Can someone explain how this happens? Who buys stock at $45 and then the very next day sells it under that?
- dragonwriter 7y ago
  > Who buys stock at $45 and then the very next day sells it under that? Data-based traders (including bots) who dont suffer from the sunk cost fallacy. Also, who says the people selling were IPO buyers? Other people (including some that would not be impacted by insider windows) had stock before the IPO but had less ability to trade it when it wasn't public.
  - Waterluvian 7y ago
    Ah interesting. I didn't think anyone who owned stock before IPO could sell it that soon. Yeah I could see myself bailing out if I had knowledge of what Uber was like from the inside.
    - cududa 7y ago
      They can’t. There’s a 90 day lockup period

It's going to be a wild ride. While (*most) people seem to like using Uber, headlines about how the unit economics don't work, how drivers can't make a living, how their working conditions aren't tenable keep popping up. How does Uber intend to address this? In addition, I have questions about the service's ability to grow significant multipliers. It really feels like they've reached the majority of their markets three years ago, and have been tweaking things since. Why would you invest in this? Is there a clear value proposition for future growth?

behringer 7y ago
You're investing in driverless cars at this point.
- munk-a 7y ago
  But not in one of the companies that appears to be well poised to win first entrance into the market. I think it's likely a dark horse will end up being first to market - but I think google will be there pretty soon after - uber's probably going to end up retrofitting any hardware they've developed with the winner's software as a way to scrounge back some of the R&D costs.
- jressey 7y ago
  I am a bit more cynical and I would say you are investing in paying off the earlier investors.
- inflatableDodo 7y ago
  Sounds like a euphemism for betting on horses.
  - behringer 7y ago
    That's what the stock market is
strikelaserclaw 7y ago
The whole thing is bizarre, who is buying these stocks?
- r00fus 7y ago
  Institutional investors?
- chomp 7y ago
  Funds, mostly. Investors who want a large stake of control and see intrinsic value in a TNC outside of the numbers. People who buy into California math. People buying a $42 lottery ticket. ML trading algorithms who have a tensor weighted heavily on "unicorn going public" that ends up equating to "Buy". Family or friends of employees that want to buy so they can "root for the company" (Yes this sounds ridiculous but this happened to a personal friend of mine and his mother still always asks why the stock is down 300% from when she bought it, and when she can expect for it to go up.) There's a lot of reasons why people would buy Uber. But for anyone who is investing safely for retirement, I think it's easy to see that this is not an investable company at the moment.
- inscionent 7y ago
  Many retirement portfolio managers.
- sigstoat 7y ago
  not the index funds, unlike what the sibling comments are suggesting. IPOs aren't even added to the indexes until it's been some months since their IPO.
ProAm 7y ago
OR how about the super questionable culture of the company and its executives and leadership? Those are such red flags by themselves... This is a horrid company with a horrible past that wouldn't die because of VC money.
- inflatableDodo 7y ago
  I had a funny discussion about Uber with my uncle. I said I refuse to use it because they are a shitty company who are only cheap because they are using investor money to subsidise the rides on the plan of forcing the other players out of the market. His answer was that the barriers to entry on private car hire are so low that if Uber are doing this as their plan and I dislike them, I should use them as much as possible, as then they will collapse quicker.
  - eridius 7y ago
    Doing exactly what Uber wants isn't how you kill them. They're subsidizing the rides right now, but if everybody followed your uncle's advice, Uber would very quickly "win" the rideshare wars, establish their long-sought-after monopoly, and raise prices.
    - toomuchtodo 7y ago
      Better to support legislation that pushes the minimum wage up for rideshare and taxi drivers in top markets (see: Lyft $17/hr minimum in NYC). Faster death than trying to bleed Uber and Lyft dry through rides (which could take forever depending on investor taste for losses), and full self driving won't arrive anytime soon. Ride the populism wave.
      - inflatableDodo 7y ago
        >which could take forever depending on investor taste for losses If the existing investors had much more of a taste for losses, why the IPO?
zeropnc 7y ago
Ehm majority of their markets? The entire developing world says hello
Morialkar 7y ago
I think they hope to boost their value by going into the self-driving cars/cabs business, how much that will work if up in the air though...
- mtgx 7y ago
  Full self-driving cars will be unproven/limited to certain very specific areas for a while. And Uber will have to deal with the liability from accidents, too, plus the media storms (and they have enough of those already).
partiallypro 7y ago
Is not just Uber, it's LYFT, neither can seem to make a profit. That kind of worries me because both are so convenient and so help people with limited income.

joelbondurant 7y ago

There's a reason IPOs are called exits.

angrydev 7y ago

Facebook's IPO was also off to a rather rough start[1], so I am not putting much stock into what happens in a single day. I have not purchased or plan to purchase any Uber stock, I just think it's important to have perspective on this event. https://en.wikipedia.org/wiki/Initial_public_offering_of_Facebook#Subsequent_days https://en.wikipedia.org/wiki/Initial_public_offering_of_Fac...

garmaine 7y ago
As was Google’s.

WheelsAtLarge 7y ago

This can't be a surprise to anyone. Given Lyfts performance, after it's IPO, the fact that UBER is not profitable and really doesn't have a near term plan to be. The stock will continue to struggle. They could follow the Amazon model to profits, get big enough to dominate the niche, but they at least need a profit engine, that would give them cash flow. It would let the company grow without having to continuously have to raise money and keep the stock price stable. Look for the company to continuously raise money or to reduce service. None is good for the stock's future price.

kahnjw 7y ago
Can Uber count on being the incumbent the way Amazon did? Amazon built up physical logistics infrastructure and a subscription service that serve as a barrier to entry for competitors. Uber's only real market foothold is a network of drivers, the turnover rate of which is high. To most users, ride shares are a commodity. Savvy user's already check available services prior to booking.
- deleted 7y ago
  [deleted]

Waterluvian 7y ago

So I'm kinda dumb when it comes to the stock market. Can someone explain how this happens? Who buys stock at $45 and then the very next day sells it under that?

dragonwriter 7y ago
> Who buys stock at $45 and then the very next day sells it under that? Data-based traders (including bots) who dont suffer from the sunk cost fallacy. Also, who says the people selling were IPO buyers? Other people (including some that would not be impacted by insider windows) had stock before the IPO but had less ability to trade it when it wasn't public.
- Waterluvian 7y ago
  Ah interesting. I didn't think anyone who owned stock before IPO could sell it that soon. Yeah I could see myself bailing out if I had knowledge of what Uber was like from the inside.
  - cududa 7y ago
    They can’t. There’s a 90 day lockup period