Investor market disappoints Uber as the leading transportation company closes its first day of trading down 7.6 percent from its IPO of $45. Trading was done at the New York Stock Exchange Friday, May 10.
These numbers came as a surprise even to the Wall Street banks that predicted Uber could be valued at $120 billion on its IPO this year. It was only last year when expectations were that Uber would go down as the largest American company to go public on an American stock exchange in history.
It seems though that record has yet to be broken as the company shares were valued at $41.57 by the end of the trade. The company shares’ performance is a far cry from other tech companies’ moving towards the stock market, like cloud-based software Slack and the fast-growing fitness equipment company Peloton.
The change in investor mindset may have been due to a slew of scandals that have haunted the San Francisco based company in previous years.
After Garrett Camp and Travis Kalanick cofounded the company in 2009, it has displayed a remarkable growth trajectory, so much so that “to Uber” became synonymous with “catching a ride.” Fueled by meritocratic and highly competitive work culture, the company navigated through their target sales revenue at high speeds, but eventually lost control as complaints from employees on sexual harassment and discrimination began to surface.
Failure to drive at favorable business outcomes were traced back to the toxic work environment that then chief executive Kalanick tolerated. The corporate culture was proven to be problematic enough for him to exit in 2017 under the pressure of the company’s major investors who claim that his faulty leadership causes too much of the company’s existing challenges. This paved the way for the company to fall under the helm of Dara Khosrowshahi, former chief of online travel marketplace Expedia.
Uber, as a new technology, also challenged regulators and work cultures all over the globe, including regular taxi drivers who claim that the app undermines their work for various reasons. Moreover, a decentralized corporate structure allowed autonomy among regional offices presenting lapses in controls that bit the company on its behind when bad decisions are called.
Millions in corporate spending for product and service diversification such as Uber Eats, their food delivery service, have also been made. But spending on projects like their autonomous vehicles that are not expected to yield profit any time soon pose to be a problem.
Uber raised $8.1 million from its IPO. And while the first day of trading does not necessarily indicate how the company’s shares will perform over the long term, we can take that unlike as historically expected; investors no longer pounce at first sight of fast-growing but unprofitable firms.