24 ms·

Uber opens at $42 per share

397 points by kgwgk 8y ago

jerkstate 8y ago
it's all a matter of perspective, I think an $80 billion market cap for a company that loses billions of dollars every year with no end in sight is not that disappointing at all for those who can sell today
- kgwgk 8y ago
  Those who can sell today did buy it for a higher price yesterday, I think.
chollida1 8y ago
Some notes from watching Uber open: - if it closes below $45(its IPO price) it will be the first time since 2008 that the happened for a major IPO - TD Ameritrade executed more orders in the first 10 minutes of trading than they did for the first 2.5 hours with Lyft. - Uber is 9% of all trading at TD Ameritrade, retail loves this stock, - market is down today, which isn't helping Uber but its probably not much of a factor - Kudos to Citadel, stock opened without a hitch and they seemed to nail the opening price, - Boo to the underwriters(Morgan Stanley), who seemed to misjudge the market's appetite, important to note that major buyers at IPO, Fidelity and such already had exposure to Uber pre IPO so maybe this staying private longer but selling shares to public fudns had an effect? https://news.yahoo.com/uber-employees-may-not-partying-151719950.html https://news.yahoo.com/uber-employees-may-not-partying-15171... - interesting piece on how Uber has grown its market cap in the past few years at the expense of its share price and how that effects later employees. - later investors like the Saudi Public Investment Fund can’t be happy with the opening. - from Bloomberg without comment...."Overheard trader on the floor: “That’s what you get when you don’t make a profit. If you don’t make money, people don’t want to buy you.” - Biggest IPO since Facebook, that's something to be proud of!! Date: - June 4 is expiration of 25-day quiet period for analysts at underwriting banks. Expect bullish initiations on this date - Nov. 6 expiration of Uber's IPO lockup. Large selling pressure expected to be asserted on this day as is typical for most IPO's. Personal thought. It may be tough for employee's to not see this pop to say $65-$70 but in the long run its almost certainly better to open flat than to pull a "lyft" and get a first day pop that you price your options at in your head and to then have to cut that price by 40% before you get a chance to sell. EDIT for comment below.
- withdavidli 8y ago
  For your point on TD Ameritrade, they're offering commission rebate first 5 days. Don't believe they offered that for Lyft. They're saying it's because they did not participate in Ubers IPO.
  - deleted 8y ago
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- gilaniali 8y ago
  Where did you get the TD Ameritrade data from?
- caprese 8y ago
  doesn't matter, made $8,100,000 in a day oh you were worried about the traders and hopeful Uber employees that bet half a decade of their life on a good share price HA HAHAHA. Should really start looking at this from the underwriter and issuer perspective to understand the success story here. Retail buys ticker symbols that have been marketed to them. Everyone else dumps. Company made a ton of money and can do whatever it wants with it, they gain nothing from secondary market trading today. VCs, founders and employees can't sell for another 60-90 days, but founders can give themselves big bonuses (and employees too but I mean.. what world are you living in)
  - zeropnc 8y ago
    I feel like this point could’ve been made stronger without all the resentment
    - eropple 8y ago
      A certain level of moral dismay is not exactly unwarranted around stuff like this, is it?
    - caprese 8y ago
      no resentment from my end best way to play the stock, bond and crypto markets is from the issuer side, and a lot of people don't seem to understand that and media seems to play the role of getting people to not understand and I think it is weird they only talk about the chances for the retail/secondary market perspective, dressed up as analysis
jdavis703 8y ago
This is unfortunate for many of the rank and file Uber employees but it’s good news for the stock market in general. It’s showing we’re not in a tech bubble and companies are still going to be valued based on how strong their business case is.
- astrodust 8y ago
  Uber is valued a whole bunch above zero which is where that company will be when it runs out of money, which it will relatively soon at the rate it's going.
- bfrog 8y ago
  With the burn rate uber has, it'll be bankrupt in < 2 years. There are no other suckers to buy in after the public.
  - BinaryIdiot 8y ago
    Right? This is what I don't understand. Everyone keeps saying the only way they make money is with autonomous cars but they're not even close with being able to do that (probably 5 years, at a minimum, and that's in small select areas). With such a high burn rate, what are they going to do? From everything I read they're not like Amazon where they can just "turn on" monetization unless they're going to hike up their prices. So, why would anyone invest in this stock long term? What am I missing?
    - 24gttghh 8y ago
      >...unless they're going to hike up their prices. I assume that's what any company like this does eventually once they've captured enough of the market.
      - thatoneuser 8y ago
        Anecdotal but I've definitely found alternative transit when the prices were too much. I'm not going to pay $20 more for a ride if I can just take the bus for 20 extra minutes transit time. There's a tradeoff.
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justinv 8y ago
Morgan Stanley going to have to do a lot to stabilize the price over the coming days... On Uber's side, they sold at their $45 mark. However, seems this may have been a down round vs their last private funding round ($74.1BN pre-money vs $76BN last year).
- rwmj 8y ago
  I'm confused by this comment. Is it the underwriter's job to intervene in the market after the initial sale? I thought they simply guaranteed that all the initial shares are sold.
  - justinv 8y ago
    Yes. The lead underwriter needs to stabilize the price post-IPO. When $unicorn_company IPOs, the underwriter actually sells more shares than the IPO company. If the price starts to drop below the originally listed price, the underwriter steps in to purchase these shares back at the IPO price to stabilize it. It's generally an optics play - how bad would it look if you as a bank, who wanted to continue to offer IPOs, listed a company and its stock price plummeted below IPO on the first day - obviously you didn't do a great job at valuing the company and building an adequate order book. https://www.investopedia.com/terms/s/stabilizingbid.asp https://www.investopedia.com/terms/s/stabilizingbid.asp
    - xenadu02 8y ago
      There's a limit to how much they can prop up the price though. If the market really hates the stock they won't be able to save it.
      - justinv 8y ago
        Yep. MS has around 27MM shares out there for stabilization pot IPO. Once they blow through that, it's the market's game.
        8y ago
wesammikhail 8y ago
disappointing? jesus, its been an hour. Relax your freaking noodles. What´s with everyone and instant gratification these days? The stock is still in range discovery... I myself am bearish but sitting this one out because I have no idea what to make of it. One thing I know though, calling it disappointing 1 hour after open during a tightning range is beyond irresponsible. It´s flat out stupid and lacks any understanding of how markets work. The stock could literally pop bull 5 mins from now, or not. Either way I wish people would stop with this sensationalism.
- dugluak 8y ago
  Sometimes I see no difference between these Market Gurus and Horoscope readers. Just say some bullshit authoritatively and some people will believe.
  - duxup 8y ago
    I prefer the more educated folks who provide insights like "Stocks were down today due to a sell-off"
    - mindcrime 8y ago
      Or "The Dow is down 312.9 points today due to geo-political tension in the Middle East", etc.
      - wesammikhail 8y ago
        Reminds me of Aswath Damodaran´s china bit: "When in doubt, use China. It´s gonna make you look smart while saying absolutely nothing"
        scarejunba 8y ago
        The absolute confidence with which people provide post-hoc explanations is great. Often the data is available for those explanations before the market behaviour and with $10k you could make $500k on SPY but everyone can explain after the fact but no one can predict. Absolute cock and bull nonsense.
smoyer 8y ago
My primary disappointment with the Uber IPO is that I don't have a larger wad of money to cover a short position.
- caprese 8y ago
  wow so edgy, can't even short on an IPO there are some CFD markets you can probably take a bearish position with, just fire up the VPN and move some crypto over to them
  - smoyer 8y ago
    I didn't say that I had shorted them yet, simply that I see no hope for Uber (or Lyft for that matter). Of course with the recent inversion of the yield curve, I'm pretty bearish on the whole market and likely to get out for a year or two as I did in 2007/8/9.
- kyleblarson 8y ago
  "To cover a short position" implies that you have a short position you are buying to cover. You likely mean "to put on a short position"
  - smoyer 8y ago
    Well ... if my timing and intuition are perfect then I don't actually need any cash right ;)
  - turk73 8y ago
    Buy puts? Eh, nevermind, IPOs don't have options chains yet...
  - dragontamer 8y ago
    > "to put on a short position" Put is still a bad word because it has a connotation for options trading. (put options vs call options). Maybe "to bet on a short position" is the best phrasing? "Put", "Call", and "Cover" all have precise meanings in the financial word. "Bet" is ambiguous enough that its kinda clear in this case.
ufmace 8y ago
Did I miss something? I thought Uber was still a long way from being profitable and had no plausible plan for how to become profitable.
- malvosenior 8y ago
  Just like Amazon at its IPO.
  - duxup 8y ago
    Maybe I don't remember it well enough but Amazon's business model seemed a lot more ... tangible than Uber's don't you think?
    - dymk 8y ago
      In the 1997, Amazon's proposition of "Online retailer" was also pretty far fetched. It wasn't obvious that their model was going to make them one of the largest retailers in the world.
      - duxup 8y ago
        I duno, buying stuff online seemed like the way of the future at the time IMO. When, how much and etc was just a matter of timing.
        atemerev 8y ago
        So is gig economy. Jobs will continue to decline.
        trynewideas 8y ago
        TechCrunch did a good job looking back at Amazon's IPO and it's a good read to clarify what Amazon was when it went public (a bookseller, not general retail), how insane its growth was (revenue up about 3,000% YoY from 1996 to 1997, more revenue in the quarter before its IPO than the entire previous year), and how fast the IPO came together (12 days to S-1). Even for all that growth, revenue was still around $15M. It was a minnow but it played all of its cards about as right as it could for an IPO. https://techcrunch.com/2017/06/28/a-look-back-at-amazons-1997-ipo/ https://techcrunch.com/2017/06/28/a-look-back-at-amazons-199...
cat199 8y ago
probably one of the worst days to IPO given current china/us trade spat
- Supermancho 8y ago
  I would think there's a lot more free cash floating as the sell offs continue.
  - warp_factor 8y ago
    This was used as a lame excuse. Uber had actually something to win as you said because of all the free cash floating around and the fact that Uber is completely out of China.
WMCRUN 8y ago
As an employee you typically don’t want your stock to skyrocket on the IPO. Most that do plummet as early investors sell and the employees (who have a lockup period preventing them from selling) watch their “gains” disappear. In my opinion, it’s better to have an accurately priced stock that grows at a healthy rate.
- weka 8y ago
  A cart before the horse. Who gets the most profit? The people who finance the project or the people who actually do the project? In a just world, would it be 50/50? Seems skewed... without the builders, there would no buildings.
  - geezerjay 8y ago
    > In a just world, would it be 50/50? What is your notion of "fair" and how do you go from there and arrive at that value? I mean, if the people who financed the project didn't invested a penny then the company would not have the means to get people to actually do the project.
  - NewsAware 8y ago
    And without money to build there would be no building. Not siding with either, just both are necessary ingredients for success.
  - bluecalm 8y ago
    The people who actually build the project get paid salary unlike investors who risk a lot of money and may never see a penny out of it if things go south which they well may.
notTyler 8y ago
Reminder that Facebook opened lower than this and was lower for years before they started growing. Granted, FB can, you know, make money.
- asdff 8y ago
  > Granted, FB can, you know, make money And there is the rub. Uber and lyft both loose money on every ride. Their whole strategy was to dominate sweeping markeshare by subsidizing rides, then cutting costs significantly with an autonomous network of driverless cars. AFAIK uber already failed in the second half, so there really is no plan right now with what to do with these massive expensive networks of drivers that both companies are now beholden to, other than shovel more money into the furnace and hope the lights stay on long enough for driverless cars to appear through a competitor who'd be willing to let uber use their tech. Even then I don't see margins being anything but razor thin. I'd be polishing my resume if I worked at either of these companies.
khazhou 8y ago
According to this article, stock was valued internally at $49/share in 2016, so anyone joining in the last three years will not have enjoyed any sort of rocket-ship growth. https://news.yahoo.com/uber-employees-may-not-partying-151719950.html https://news.yahoo.com/uber-employees-may-not-partying-15171...
- msoad 8y ago
  We don't know if they did a split before going public or not.
  - yellowstuff 8y ago
    Matt Levine seems pretty confident that the $48.77 price from private transactions is directly comparable to the $45 IPO price, and he knows his stuff, so I think it's safe to assume he's right. https://www.bloomberg.com/opinion/articles/2019-05-10/the-unicorn-worriers-weren-t-wrong https://www.bloomberg.com/opinion/articles/2019-05-10/the-un...
- intuitionist 8y ago
  If you’re joining a $60 billion company with thousands of employees expecting rocket-ship growth, that’s kind of on you, I think. You wouldn’t expect that from a public company; why would you from a similarly sized company that just happens to be pre-IPO?
  - marnett 8y ago
    Amazon in 2016 was $502 a share, it is $1900 now Microsoft in 2016 was $51, $127 now Facebook was $97, $189 now We're not even talking about rocket-ship growth here. We are talking about option strike prices losing money in one of the most favorable economic time periods where massive, healthy public business did have monstrous growth. I would have at least expected price parity with other large companies - even that assumption would have been wrong.
    - JMTQp8lwXL 8y ago
outside1234 8y ago
I mean, let's be real here, is $42 really disappointing? Because from where I sit, this company is going to be bankrupt in short order.
- shereadsthenews 8y ago
  It's certainly disappointing for people who have been underpaid compared to industry salaries for the last several years based on their belief that their shares were worth more.
  - aetherson 8y ago
    Does Uber pay low salaries? This is the first I've heard of it.
    - shereadsthenews 8y ago
      The base salaries are comparable but the share comp, which is generally close to half of comp, was based on valuations that didn't pan out. Now that it's been marked to market it doesn't look great. Keep in mind that other tech companies have doubled their share price or better in the last four years.
      - aetherson 8y ago
        Uh, okay, but what you actually said was people were "underpaid compared to industry salaries." When you accept equity, you accept risk. I don't think that there's a terribly bright future for Uber, but the stock hasn't been a catastrophe so far, and all the other big stocks will have disappointing times too.
        shereadsthenews 8y ago
        In the context of the individual it is useless to speak of average outcomes. Over the lifetime of Uber all other tech stocks have had a huge run. If you had a choice to work at Nvidia and you worked at Uber instead you left $5 million on the table.
throwaway66666 8y ago
Unprofitable companies are the only ones that really benefit from IPOs. An IPO is basically a way for the company to raise money, but tis time straight from the public. Usually when it gets harder and harder for them to attract private investors. The IPO listing basically guarantees that they won't take the public's billions and run. Successful companies with perfect cash flows (think of Github, Valve, IKEA) always try to remain private. Because they have nothing to gain by raising more money. They can give their employees good bonuses and maintain control of the company. This is by design. In Silicon Valley we are obsessed with them because they are the only meaningful exit for common employees (take the money and run mentality). The rest of the world doesn't care much because they see them for what they are. Of course. Startup employees do not know they can sell their 'private' stock already, today. However, they need permissions to do so from the company's board (their answer will be NO. Here, saved you from asking. Or maybe they will offer to buy back the stock with shitty terms), and can only sell them to an accredited investor and not random people/public. Many companies would be ran better if they remained private (think of Facebook, which now has investor pressure to increase the price, which results in careless decisions about data handling, privacy etc).
- duxup 8y ago
  I'm not really sure about that. Just like taking investor money at anytime it can be a way to get extra cash to continue to build the company quickly. The IPO system is wonky and there are bad examples but I don't think your rule makes sense.
- draw_down 8y ago
  Yeah, the employees are the greedy ones.
- kgwgk 8y ago
  Profitable companies may also want to raise money, to invest it in their profitable business opportunities and generate even more profits.
- Duhck 8y ago
  Needing to raise cash to operate or expand, and positive cashflow arent mutually exclusive ideas. A company can be profitable and still need more working capital to expand. That being said, I don't know what to make of Uber, Lyft and WeWork (future) IPO's yet, but I am highly skeptical
chinesegoldfarm 8y ago
legit/dumb question. Math does not add for me on the '$82.4B valuation', they are selling 180 millon shares at $45 which is $8.1B what is the remaining 82.4b - 8.1b = 74.3b value come from????? it said: "Uber had raised $28.5 billion as a private company from no less than 166 different backers, with its last valuation in the region of $75 billion. The $82.4 billion valuation that it finally settled on for the IPO (selling 180 million shares at $45/share)" So it means that when they raised the 28.5b privately it went to 75b valuation???? please explain, thanks in advance...
- tonfa 8y ago
  The market cap (valuation) is the value of one share times the number of outstanding shares (those part of the IPO but also all the existing ones). $8B is the amount of capital raised during the IPO.
  - chinesegoldfarm 8y ago
    but when you buy a share, you are part of only the 8B thats being raised with the other 180 million shares, or do you have a small part of the whole 80~b valuation?
    - hunter23 8y ago
      There are 80 billion dollars worth of shares that exist. However only 8 billion of those shares were released for the public markets. The remaining 72 billion dollars worth of shares are held outside of the public markets (insiders, vcs, the company itself, etc.)
      - stokedmartin 8y ago
        Till such time those 72b shares do not become public, are these technically still referred to as options? Also, for ex-uber employees who still own shares, how does one restrict them to not sell those in the public market assuming they are part of the 72b or will they only be part of the 8b?
jklinger410 8y ago
How do you short stocks? Asking for a friend.
- conanbatt 8y ago
  You can buy puts on robinhood fairly easily.
- marcosdumay 8y ago
  If you have to ask, please refrain from acting and study a bit. Shorting is risky business.
NN88 8y ago
how would the average employee at uber HQ who was there for 4-5 years before today?
gigatexal 8y ago
Meh. Bought shares in Zoom. They’re actually profitable. Yes, yes, I know. This kind of thinking would have me not investing in an Amazon back in the day because they weren't profitable... but they weren't also losing almost as much as they were making in revenue either... and were actually selling a tangible good to prove out a business plan of basically world domination... so yeah I'm happy with my shares of Zoom.
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Yuval_Halevi 8y ago
Uber and Lyft IPO is the worst thing that can happen to their users. Uber will need to become more profitable so they will raise their prices and the users will be the ones who suffer from this IPO
LeicaLatte 8y ago
Congrats to everyone!
busymom0 8y ago
There's way too many comments in this thread comparing Uber's non-profitability to Amazon's which I think is quite silly. Amazon lost $2.8 billion over its first 17 quarters while Uber lost $4.5 billion in 2017 alone. Also comparing Uber to Facebook is quite silly too. Facebook had a lot more users than Uber but they are also different types of users. One is a free user with hope for targeted advertisement (in which the advertiser gains/loses money) whereas the other is paid users/riders (but in this case Uber has been losing money each ride and I don't see it changing). Also advertisement has huge margins with not much cost from Facebook's pov but ride sharing logistics is completely different with very little margin where the driver needs to get paid. Drivers are already complaining that they are not getting paid enough for rides and asking Uber to take lesser cut of the ride. So Uber can't raise their cut over their current 20-25%. Facebook's advertisement business doesn't have this problem. Nor does Amazon as they can make their logistics more efficient. Amazon is able to lower it's cost with economies of scale but I don't see Uber being able to achieve that as their costs only increase as they scale as they lose money on every ride. The only way I can see them become profitable is if and when they achieve driverless cars, which they are betting huge on, but that's a long way to go. Uber is betting on driverless cars to lower the cost per mile. But I think Tesla will beat them to market much much before them considering Tesla already has the tech. Elon even hinted on the Tesla taxi fleet in the next couple years. Now I realize Elon's got poor judgement on timing but I still think they will be able to achieve that much earlier than Uber. And if they do, I honestly don't see Uber & Lyft surviving.
- sova 8y ago
  Well said! Given that UBER actually follows a model that looks like: Don't own the equipment, rent people who own their own equipment, be the middleman. It's quite reminiscent of Truck Driving or some sort of specialty guildswork, like carpentry or other professions there are Guilds for. UBER is a replicable model for any guildswork, taxi [guild] service conveniently benefitting from GPS and mapping. However, since UBER owns not the equipment, and only rents the laborers (without a strong "come in to the office" type of contract) it's hard to see where the value of this company actually lies. Of course, due to their brand monopoly, or duopoly, they are able to keep strength for a while. But, eventually, guildsworks in general will probably be delegated to some other motherlode app. If they need help growing or figuring out how to actually make a profitable company, they need to stop thinking about how to be a taxi service, and how to be a transportation provider.
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dannykwells 8y ago
Given this price (and the likely downward trend to come if Lyft is any predictor), I wonder if Uber and Lyft are really just an act of philanthropy from SF VCs + SA to hungry/drunk/tired city-dwelling folk. If so, thanks guys! (* and you mostly are guys). Next ones on me!
- umeshunni 8y ago
  It's not the VC's money - it's money from wealthy investors and more recently sovereign funds and even pension funds.
- sytelus 8y ago
  It is never VC money... VCs get paid back few times over. It's our 401Ks that would be automatically funding these IPOs via index funds. So you can say that this is some weird form of socialism enabled by capitalism.
onesmallcoin 8y ago
Tech crunch's new close to home page button is a daring move I pressed it to see what would happen and then decided not to read the article I came their to read the news not to be sold more news.
khazhou 8y ago
To add insult to injury for Uber's rank and file equity-holding employees: the terms of Uber's stock offers (at least since 2016 if not earlier) say that you cannot sell your shares until one year after they officially vest. That's right, they tack on an additional one-year waiting period for each block of shares awarded. So if you had shares that vested today, e.g., you can't sell those even when the regular six-month lockup period expires... you have to wait until May 2020. (source: turned down offer in 2016 because of employee-unfriendly terms)
melbourne_mat 8y ago
Only a moron buys public shares from this company. They are not profitable now, have never been, will not be in the forseeable future, it's employees hate the company, customers will shift to any competitor that comes along.
- dang 8y ago
  Please don't post shallow dismissals and name-calling rants to HN. We're trying for better than that here, such as comments with information we can learn from. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
Marazan 8y ago
"Uber created the market for on demand transportation" What the fuck is this? It's a mini cab firm with an app. Mini cab firms existed before Uber.
sudoaza 8y ago
Not profitable while reaching the market ceiling and bad reception in lots of places... no wonder here
truffle_pig 8y ago
Uber is currently worth more than Stripe, Spotify and Dropbox combined. I'd easily rather own those 3 outright than Uber. Wonder what the market knows that I'm missing.
stjohnswarts 8y ago
Overpriced. However I don't see them going belly up like all the naysayers over in the corner with pitchforks who are declaring them doomed

397 points by kgwgk 8y ago

it's all a matter of perspective, I think an $80 billion market cap for a company that loses billions of dollars every year with no end in sight is not that disappointing at all for those who can sell today

kgwgk 8y ago
Those who can sell today did buy it for a higher price yesterday, I think.

chollida1 8y ago

Some notes from watching Uber open: - if it closes below $45(its IPO price) it will be the first time since 2008 that the happened for a major IPO - TD Ameritrade executed more orders in the first 10 minutes of trading than they did for the first 2.5 hours with Lyft. - Uber is 9% of all trading at TD Ameritrade, retail loves this stock, - market is down today, which isn't helping Uber but its probably not much of a factor - Kudos to Citadel, stock opened without a hitch and they seemed to nail the opening price, - Boo to the underwriters(Morgan Stanley), who seemed to misjudge the market's appetite, important to note that major buyers at IPO, Fidelity and such already had exposure to Uber pre IPO so maybe this staying private longer but selling shares to public fudns had an effect? https://news.yahoo.com/uber-employees-may-not-partying-151719950.html https://news.yahoo.com/uber-employees-may-not-partying-15171... - interesting piece on how Uber has grown its market cap in the past few years at the expense of its share price and how that effects later employees. - later investors like the Saudi Public Investment Fund can’t be happy with the opening. - from Bloomberg without comment...."Overheard trader on the floor: “That’s what you get when you don’t make a profit. If you don’t make money, people don’t want to buy you.” - Biggest IPO since Facebook, that's something to be proud of!! Date: - June 4 is expiration of 25-day quiet period for analysts at underwriting banks. Expect bullish initiations on this date - Nov. 6 expiration of Uber's IPO lockup. Large selling pressure expected to be asserted on this day as is typical for most IPO's. Personal thought. It may be tough for employee's to not see this pop to say $65-$70 but in the long run its almost certainly better to open flat than to pull a "lyft" and get a first day pop that you price your options at in your head and to then have to cut that price by 40% before you get a chance to sell. EDIT for comment below.

withdavidli 8y ago
For your point on TD Ameritrade, they're offering commission rebate first 5 days. Don't believe they offered that for Lyft. They're saying it's because they did not participate in Ubers IPO.
- deleted 8y ago
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gilaniali 8y ago
Where did you get the TD Ameritrade data from?
caprese 8y ago
doesn't matter, made $8,100,000 in a day oh you were worried about the traders and hopeful Uber employees that bet half a decade of their life on a good share price HA HAHAHA. Should really start looking at this from the underwriter and issuer perspective to understand the success story here. Retail buys ticker symbols that have been marketed to them. Everyone else dumps. Company made a ton of money and can do whatever it wants with it, they gain nothing from secondary market trading today. VCs, founders and employees can't sell for another 60-90 days, but founders can give themselves big bonuses (and employees too but I mean.. what world are you living in)
- zeropnc 8y ago
  I feel like this point could’ve been made stronger without all the resentment
  - eropple 8y ago
    A certain level of moral dismay is not exactly unwarranted around stuff like this, is it?
  - caprese 8y ago
    no resentment from my end best way to play the stock, bond and crypto markets is from the issuer side, and a lot of people don't seem to understand that and media seems to play the role of getting people to not understand and I think it is weird they only talk about the chances for the retail/secondary market perspective, dressed up as analysis

jdavis703 8y ago

This is unfortunate for many of the rank and file Uber employees but it’s good news for the stock market in general. It’s showing we’re not in a tech bubble and companies are still going to be valued based on how strong their business case is.

astrodust 8y ago
Uber is valued a whole bunch above zero which is where that company will be when it runs out of money, which it will relatively soon at the rate it's going.
bfrog 8y ago
With the burn rate uber has, it'll be bankrupt in < 2 years. There are no other suckers to buy in after the public.
- BinaryIdiot 8y ago
  Right? This is what I don't understand. Everyone keeps saying the only way they make money is with autonomous cars but they're not even close with being able to do that (probably 5 years, at a minimum, and that's in small select areas). With such a high burn rate, what are they going to do? From everything I read they're not like Amazon where they can just "turn on" monetization unless they're going to hike up their prices. So, why would anyone invest in this stock long term? What am I missing?
  - 24gttghh 8y ago
    >...unless they're going to hike up their prices. I assume that's what any company like this does eventually once they've captured enough of the market.
    - thatoneuser 8y ago
      Anecdotal but I've definitely found alternative transit when the prices were too much. I'm not going to pay $20 more for a ride if I can just take the bus for 20 extra minutes transit time. There's a tradeoff.

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justinv 8y ago

Morgan Stanley going to have to do a lot to stabilize the price over the coming days... On Uber's side, they sold at their $45 mark. However, seems this may have been a down round vs their last private funding round ($74.1BN pre-money vs $76BN last year).

rwmj 8y ago
I'm confused by this comment. Is it the underwriter's job to intervene in the market after the initial sale? I thought they simply guaranteed that all the initial shares are sold.
- justinv 8y ago
  Yes. The lead underwriter needs to stabilize the price post-IPO. When $unicorn_company IPOs, the underwriter actually sells more shares than the IPO company. If the price starts to drop below the originally listed price, the underwriter steps in to purchase these shares back at the IPO price to stabilize it. It's generally an optics play - how bad would it look if you as a bank, who wanted to continue to offer IPOs, listed a company and its stock price plummeted below IPO on the first day - obviously you didn't do a great job at valuing the company and building an adequate order book. https://www.investopedia.com/terms/s/stabilizingbid.asp https://www.investopedia.com/terms/s/stabilizingbid.asp
  - xenadu02 8y ago
    There's a limit to how much they can prop up the price though. If the market really hates the stock they won't be able to save it.
    - justinv 8y ago
      Yep. MS has around 27MM shares out there for stabilization pot IPO. Once they blow through that, it's the market's game.
      - 8y ago

wesammikhail 8y ago

disappointing? jesus, its been an hour. Relax your freaking noodles. What´s with everyone and instant gratification these days? The stock is still in range discovery... I myself am bearish but sitting this one out because I have no idea what to make of it. One thing I know though, calling it disappointing 1 hour after open during a tightning range is beyond irresponsible. It´s flat out stupid and lacks any understanding of how markets work. The stock could literally pop bull 5 mins from now, or not. Either way I wish people would stop with this sensationalism.

dugluak 8y ago
Sometimes I see no difference between these Market Gurus and Horoscope readers. Just say some bullshit authoritatively and some people will believe.
- duxup 8y ago
  I prefer the more educated folks who provide insights like "Stocks were down today due to a sell-off"
  - mindcrime 8y ago
    Or "The Dow is down 312.9 points today due to geo-political tension in the Middle East", etc.
    - wesammikhail 8y ago
      Reminds me of Aswath Damodaran´s china bit: "When in doubt, use China. It´s gonna make you look smart while saying absolutely nothing"
      - scarejunba 8y ago
        The absolute confidence with which people provide post-hoc explanations is great. Often the data is available for those explanations before the market behaviour and with $10k you could make $500k on SPY but everyone can explain after the fact but no one can predict. Absolute cock and bull nonsense.

smoyer 8y ago

My primary disappointment with the Uber IPO is that I don't have a larger wad of money to cover a short position.

caprese 8y ago
wow so edgy, can't even short on an IPO there are some CFD markets you can probably take a bearish position with, just fire up the VPN and move some crypto over to them
- smoyer 8y ago
  I didn't say that I had shorted them yet, simply that I see no hope for Uber (or Lyft for that matter). Of course with the recent inversion of the yield curve, I'm pretty bearish on the whole market and likely to get out for a year or two as I did in 2007/8/9.
kyleblarson 8y ago
"To cover a short position" implies that you have a short position you are buying to cover. You likely mean "to put on a short position"
- smoyer 8y ago
  Well ... if my timing and intuition are perfect then I don't actually need any cash right ;)
- turk73 8y ago
  Buy puts? Eh, nevermind, IPOs don't have options chains yet...
- dragontamer 8y ago
  > "to put on a short position" Put is still a bad word because it has a connotation for options trading. (put options vs call options). Maybe "to bet on a short position" is the best phrasing? "Put", "Call", and "Cover" all have precise meanings in the financial word. "Bet" is ambiguous enough that its kinda clear in this case.

ufmace 8y ago

Did I miss something? I thought Uber was still a long way from being profitable and had no plausible plan for how to become profitable.

malvosenior 8y ago
Just like Amazon at its IPO.
- duxup 8y ago
  Maybe I don't remember it well enough but Amazon's business model seemed a lot more ... tangible than Uber's don't you think?
  - dymk 8y ago
    In the 1997, Amazon's proposition of "Online retailer" was also pretty far fetched. It wasn't obvious that their model was going to make them one of the largest retailers in the world.
    - duxup 8y ago
      I duno, buying stuff online seemed like the way of the future at the time IMO. When, how much and etc was just a matter of timing.
      - atemerev 8y ago
        So is gig economy. Jobs will continue to decline.
      - trynewideas 8y ago
        TechCrunch did a good job looking back at Amazon's IPO and it's a good read to clarify what Amazon was when it went public (a bookseller, not general retail), how insane its growth was (revenue up about 3,000% YoY from 1996 to 1997, more revenue in the quarter before its IPO than the entire previous year), and how fast the IPO came together (12 days to S-1). Even for all that growth, revenue was still around $15M. It was a minnow but it played all of its cards about as right as it could for an IPO. https://techcrunch.com/2017/06/28/a-look-back-at-amazons-1997-ipo/ https://techcrunch.com/2017/06/28/a-look-back-at-amazons-199...

cat199 8y ago

probably one of the worst days to IPO given current china/us trade spat

Supermancho 8y ago
I would think there's a lot more free cash floating as the sell offs continue.
- warp_factor 8y ago
  This was used as a lame excuse. Uber had actually something to win as you said because of all the free cash floating around and the fact that Uber is completely out of China.

WMCRUN 8y ago

As an employee you typically don’t want your stock to skyrocket on the IPO. Most that do plummet as early investors sell and the employees (who have a lockup period preventing them from selling) watch their “gains” disappear. In my opinion, it’s better to have an accurately priced stock that grows at a healthy rate.

weka 8y ago
A cart before the horse. Who gets the most profit? The people who finance the project or the people who actually do the project? In a just world, would it be 50/50? Seems skewed... without the builders, there would no buildings.
- geezerjay 8y ago
  > In a just world, would it be 50/50? What is your notion of "fair" and how do you go from there and arrive at that value? I mean, if the people who financed the project didn't invested a penny then the company would not have the means to get people to actually do the project.
- NewsAware 8y ago
  And without money to build there would be no building. Not siding with either, just both are necessary ingredients for success.
- bluecalm 8y ago
  The people who actually build the project get paid salary unlike investors who risk a lot of money and may never see a penny out of it if things go south which they well may.

notTyler 8y ago

Reminder that Facebook opened lower than this and was lower for years before they started growing. Granted, FB can, you know, make money.

asdff 8y ago
> Granted, FB can, you know, make money And there is the rub. Uber and lyft both loose money on every ride. Their whole strategy was to dominate sweeping markeshare by subsidizing rides, then cutting costs significantly with an autonomous network of driverless cars. AFAIK uber already failed in the second half, so there really is no plan right now with what to do with these massive expensive networks of drivers that both companies are now beholden to, other than shovel more money into the furnace and hope the lights stay on long enough for driverless cars to appear through a competitor who'd be willing to let uber use their tech. Even then I don't see margins being anything but razor thin. I'd be polishing my resume if I worked at either of these companies.

khazhou 8y ago

According to this article, stock was valued internally at $49/share in 2016, so anyone joining in the last three years will not have enjoyed any sort of rocket-ship growth. https://news.yahoo.com/uber-employees-may-not-partying-151719950.html https://news.yahoo.com/uber-employees-may-not-partying-15171...

msoad 8y ago
We don't know if they did a split before going public or not.
- yellowstuff 8y ago
  Matt Levine seems pretty confident that the $48.77 price from private transactions is directly comparable to the $45 IPO price, and he knows his stuff, so I think it's safe to assume he's right. https://www.bloomberg.com/opinion/articles/2019-05-10/the-unicorn-worriers-weren-t-wrong https://www.bloomberg.com/opinion/articles/2019-05-10/the-un...
intuitionist 8y ago
If you’re joining a $60 billion company with thousands of employees expecting rocket-ship growth, that’s kind of on you, I think. You wouldn’t expect that from a public company; why would you from a similarly sized company that just happens to be pre-IPO?
- marnett 8y ago
  Amazon in 2016 was $502 a share, it is $1900 now Microsoft in 2016 was $51, $127 now Facebook was $97, $189 now We're not even talking about rocket-ship growth here. We are talking about option strike prices losing money in one of the most favorable economic time periods where massive, healthy public business did have monstrous growth. I would have at least expected price parity with other large companies - even that assumption would have been wrong.
  - JMTQp8lwXL 8y ago

outside1234 8y ago

I mean, let's be real here, is $42 really disappointing? Because from where I sit, this company is going to be bankrupt in short order.

shereadsthenews 8y ago
It's certainly disappointing for people who have been underpaid compared to industry salaries for the last several years based on their belief that their shares were worth more.
- aetherson 8y ago
  Does Uber pay low salaries? This is the first I've heard of it.
  - shereadsthenews 8y ago
    The base salaries are comparable but the share comp, which is generally close to half of comp, was based on valuations that didn't pan out. Now that it's been marked to market it doesn't look great. Keep in mind that other tech companies have doubled their share price or better in the last four years.
    - aetherson 8y ago
      Uh, okay, but what you actually said was people were "underpaid compared to industry salaries." When you accept equity, you accept risk. I don't think that there's a terribly bright future for Uber, but the stock hasn't been a catastrophe so far, and all the other big stocks will have disappointing times too.
      - shereadsthenews 8y ago
        In the context of the individual it is useless to speak of average outcomes. Over the lifetime of Uber all other tech stocks have had a huge run. If you had a choice to work at Nvidia and you worked at Uber instead you left $5 million on the table.

throwaway66666 8y ago

Unprofitable companies are the only ones that really benefit from IPOs. An IPO is basically a way for the company to raise money, but tis time straight from the public. Usually when it gets harder and harder for them to attract private investors. The IPO listing basically guarantees that they won't take the public's billions and run. Successful companies with perfect cash flows (think of Github, Valve, IKEA) always try to remain private. Because they have nothing to gain by raising more money. They can give their employees good bonuses and maintain control of the company. This is by design. In Silicon Valley we are obsessed with them because they are the only meaningful exit for common employees (take the money and run mentality). The rest of the world doesn't care much because they see them for what they are. Of course. Startup employees do not know they can sell their 'private' stock already, today. However, they need permissions to do so from the company's board (their answer will be NO. Here, saved you from asking. Or maybe they will offer to buy back the stock with shitty terms), and can only sell them to an accredited investor and not random people/public. Many companies would be ran better if they remained private (think of Facebook, which now has investor pressure to increase the price, which results in careless decisions about data handling, privacy etc).

duxup 8y ago
I'm not really sure about that. Just like taking investor money at anytime it can be a way to get extra cash to continue to build the company quickly. The IPO system is wonky and there are bad examples but I don't think your rule makes sense.
draw_down 8y ago
Yeah, the employees are the greedy ones.
kgwgk 8y ago
Profitable companies may also want to raise money, to invest it in their profitable business opportunities and generate even more profits.
Duhck 8y ago
Needing to raise cash to operate or expand, and positive cashflow arent mutually exclusive ideas. A company can be profitable and still need more working capital to expand. That being said, I don't know what to make of Uber, Lyft and WeWork (future) IPO's yet, but I am highly skeptical

chinesegoldfarm 8y ago

legit/dumb question. Math does not add for me on the '$82.4B valuation', they are selling 180 millon shares at $45 which is $8.1B what is the remaining 82.4b - 8.1b = 74.3b value come from????? it said: "Uber had raised $28.5 billion as a private company from no less than 166 different backers, with its last valuation in the region of $75 billion. The $82.4 billion valuation that it finally settled on for the IPO (selling 180 million shares at $45/share)" So it means that when they raised the 28.5b privately it went to 75b valuation???? please explain, thanks in advance...

tonfa 8y ago
The market cap (valuation) is the value of one share times the number of outstanding shares (those part of the IPO but also all the existing ones). $8B is the amount of capital raised during the IPO.
- chinesegoldfarm 8y ago
  but when you buy a share, you are part of only the 8B thats being raised with the other 180 million shares, or do you have a small part of the whole 80~b valuation?
  - hunter23 8y ago
    There are 80 billion dollars worth of shares that exist. However only 8 billion of those shares were released for the public markets. The remaining 72 billion dollars worth of shares are held outside of the public markets (insiders, vcs, the company itself, etc.)
    - stokedmartin 8y ago
      Till such time those 72b shares do not become public, are these technically still referred to as options? Also, for ex-uber employees who still own shares, how does one restrict them to not sell those in the public market assuming they are part of the 72b or will they only be part of the 8b?

jklinger410 8y ago

How do you short stocks? Asking for a friend.

conanbatt 8y ago
You can buy puts on robinhood fairly easily.
marcosdumay 8y ago
If you have to ask, please refrain from acting and study a bit. Shorting is risky business.

NN88 8y ago

how would the average employee at uber HQ who was there for 4-5 years before today?

gigatexal 8y ago

Meh. Bought shares in Zoom. They’re actually profitable. Yes, yes, I know. This kind of thinking would have me not investing in an Amazon back in the day because they weren't profitable... but they weren't also losing almost as much as they were making in revenue either... and were actually selling a tangible good to prove out a business plan of basically world domination... so yeah I'm happy with my shares of Zoom.

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Yuval_Halevi 8y ago

Uber and Lyft IPO is the worst thing that can happen to their users. Uber will need to become more profitable so they will raise their prices and the users will be the ones who suffer from this IPO

LeicaLatte 8y ago

Congrats to everyone!

busymom0 8y ago

There's way too many comments in this thread comparing Uber's non-profitability to Amazon's which I think is quite silly. Amazon lost $2.8 billion over its first 17 quarters while Uber lost $4.5 billion in 2017 alone. Also comparing Uber to Facebook is quite silly too. Facebook had a lot more users than Uber but they are also different types of users. One is a free user with hope for targeted advertisement (in which the advertiser gains/loses money) whereas the other is paid users/riders (but in this case Uber has been losing money each ride and I don't see it changing). Also advertisement has huge margins with not much cost from Facebook's pov but ride sharing logistics is completely different with very little margin where the driver needs to get paid. Drivers are already complaining that they are not getting paid enough for rides and asking Uber to take lesser cut of the ride. So Uber can't raise their cut over their current 20-25%. Facebook's advertisement business doesn't have this problem. Nor does Amazon as they can make their logistics more efficient. Amazon is able to lower it's cost with economies of scale but I don't see Uber being able to achieve that as their costs only increase as they scale as they lose money on every ride. The only way I can see them become profitable is if and when they achieve driverless cars, which they are betting huge on, but that's a long way to go. Uber is betting on driverless cars to lower the cost per mile. But I think Tesla will beat them to market much much before them considering Tesla already has the tech. Elon even hinted on the Tesla taxi fleet in the next couple years. Now I realize Elon's got poor judgement on timing but I still think they will be able to achieve that much earlier than Uber. And if they do, I honestly don't see Uber & Lyft surviving.

sova 8y ago
Well said! Given that UBER actually follows a model that looks like: Don't own the equipment, rent people who own their own equipment, be the middleman. It's quite reminiscent of Truck Driving or some sort of specialty guildswork, like carpentry or other professions there are Guilds for. UBER is a replicable model for any guildswork, taxi [guild] service conveniently benefitting from GPS and mapping. However, since UBER owns not the equipment, and only rents the laborers (without a strong "come in to the office" type of contract) it's hard to see where the value of this company actually lies. Of course, due to their brand monopoly, or duopoly, they are able to keep strength for a while. But, eventually, guildsworks in general will probably be delegated to some other motherlode app. If they need help growing or figuring out how to actually make a profitable company, they need to stop thinking about how to be a taxi service, and how to be a transportation provider.

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dannykwells 8y ago

Given this price (and the likely downward trend to come if Lyft is any predictor), I wonder if Uber and Lyft are really just an act of philanthropy from SF VCs + SA to hungry/drunk/tired city-dwelling folk. If so, thanks guys! (* and you mostly are guys). Next ones on me!

umeshunni 8y ago
It's not the VC's money - it's money from wealthy investors and more recently sovereign funds and even pension funds.
sytelus 8y ago
It is never VC money... VCs get paid back few times over. It's our 401Ks that would be automatically funding these IPOs via index funds. So you can say that this is some weird form of socialism enabled by capitalism.

onesmallcoin 8y ago

Tech crunch's new close to home page button is a daring move I pressed it to see what would happen and then decided not to read the article I came their to read the news not to be sold more news.

khazhou 8y ago

To add insult to injury for Uber's rank and file equity-holding employees: the terms of Uber's stock offers (at least since 2016 if not earlier) say that you cannot sell your shares until one year after they officially vest. That's right, they tack on an additional one-year waiting period for each block of shares awarded. So if you had shares that vested today, e.g., you can't sell those even when the regular six-month lockup period expires... you have to wait until May 2020. (source: turned down offer in 2016 because of employee-unfriendly terms)

melbourne_mat 8y ago

Only a moron buys public shares from this company. They are not profitable now, have never been, will not be in the forseeable future, it's employees hate the company, customers will shift to any competitor that comes along.

dang 8y ago
Please don't post shallow dismissals and name-calling rants to HN. We're trying for better than that here, such as comments with information we can learn from. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

Marazan 8y ago

"Uber created the market for on demand transportation" What the fuck is this? It's a mini cab firm with an app. Mini cab firms existed before Uber.

sudoaza 8y ago

Not profitable while reaching the market ceiling and bad reception in lots of places... no wonder here

truffle_pig 8y ago

Uber is currently worth more than Stripe, Spotify and Dropbox combined. I'd easily rather own those 3 outright than Uber. Wonder what the market knows that I'm missing.

stjohnswarts 8y ago

Overpriced. However I don't see them going belly up like all the naysayers over in the corner with pitchforks who are declaring them doomed