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Uber's market value shoots up to $82 billion on stock market debut

The IPO came in at the lower end of Uber's targeted price range of $44 to $50 per share

AP | PTI  |  San Francisco 


Uber's next stop is the market, where it hopes to pick up more investors willing to bet on a ride-hailing market brimming with potential and conspicuously lacking in profits.

The world's largest ride-hailing service reached a major milestone Thursday when priced its long-awaited initial public offering at $45 price per share to set the stage for its to begin trading morning. The IPO came in at the lower end of Uber's targeted price range of $44 to $50 per share.

The caution may have been driven by escalating doubts about the ability of to make money since Uber's main rival, Lyft, went public six weeks ago.

Even at the tamped-down price, now has a market value of $82 billion five times more than Lyft's.

No matter how Uber's swings Friday, the IPO has to be considered a triumph for the company most closely associated with an industry that has changed the way millions of people get around. That while also transforming the way millions of more people earn a living in the gig

The IPO raised another $8.1 billion for as it tries to fend off in the U.S. and help cover the cost of giving rides to passengers at unprofitable prices. The company already has lost about $9 billion since its inception and acknowledges it could still be years before it turns a profit.

That sobering reality is one reason that Uber fell well short of reaching the $120 billion market value that many observers believed its IPO might attain.

Another factor working against Uber is the cold shoulder investors have been giving Lyft's stock after an initial run-up. Lyft's shares closed Thursday 23 per cent below its April IPO price of $72.

Uber "clearly learned from its 'little brother' Lyft, and the experience it has gone through," analysts and wrote late Thursday.

The jitters about an intensifying US trade war with also have roiled the this week.

Despite all that, Uber's IPO is the biggest since Chinese debuted with a value of USD 167.6 billion in 2014.

"For the market to give you the value, you've either got to have a lot of profits or potential for huge growth," said Sam Abuelsamid, at Research.

Uber boasts growth galore. Its revenue last year surged 42% to $11.3 billion while its cars completed 5.2 billion trips around the world either giving rides to 91 million passengers or delivering

Uber might be even more popular if not for a series of revelations about unsavoury behavior that sullied its image and resulted in the ouster of its co-founder, Travis Kalanick, as nearly two years ago.

The self-inflicted wounds included complaints about rampant internal sexual harassment , accusations that it stole , and a cover-up of a computer break-in that stole personal information about its passengers.

What's more, some Uber drivers have been accused of assaulting passengers, and one of its self-driving test vehicles struck and killed a pedestrian in last year while a was behind the wheel.

Uber hired as to replace Kalanick and clean up the mess, something that analysts say has been able to do to some extent, although seized upon the scandals to gain market share.

Kalanick remains on Uber's board, although he isn't expected to be on the podium to help ring the opening bell at to herald the company's debut

Instead, he will be left standing on the sidelines while the spotlight shines on other Uber executives, although Kalanick can still savor his newfound wealth. At $45 per share, his stake in Uber will be worth $5.3 billion. Hundreds, if not thousands, of other Uber employees are expected to become millionaires in the IPO.

Meanwhile, scores of Uber drivers say they have been mistreated by the company as they work long hours and wear out their cars picking up passengers as they struggle to make ends meet.

On Wednesday, some of them participated in strikes across the to highlight their unhappiness ahead of Uber's IPO but barely caused a ripple.

A similar strike was organized ahead of Lyft's IPO to the same effect. In its latest attempt to make amends, Uber disclosed Thursday that it reached a settlement with tens of thousands of drivers who alleged they had been improperly classified as contractors. The company said the settlement covering most of the 60,000 drivers making claims will cost $146 million to USD 170 million.

Now, Uber will focus on winning over Wall Street.

Uber may be able to avoid Lyft's post-IPO stock decline because it has a different story to tell than just the potential for growth in ride-hailing, says Alejandro Ortiz, with

Uber, he said, has plans to be more than a ride-hailing company by being all to users of its app, offering deliveries, scooters, bicycles and links to other modes of including

"Whether or not that pitch will work kind of remains to be seen. It's nearly impossible to tell now," he said. "Obviously the risk to the company now is they have a lot more shareholders that they have to convince.

First Published: Fri, May 10 2019. 11:46 IST