Uber IPO has been veiled in hype for months since Uber announced their official plan to go public and even earlier in 2018 when Uber was predicted to be evaluated at 120 billion dollars.
The evaluation pegging 120 billion to Uber IPO indicated that Uber might be the biggest IPO of 2019, alongside representing the biggest public offer since Facebook evaluated at 104 billion at the time, and Alibaba that went public in 2014.
The hype didn’t do particularly well to Uber, as the ridesharing giant is now evaluated at 76.5 billion in market cap after IPO, lower than the lowest pre-IPO estimate set at 81 billion dollars.
Why Uber failed to meet the predicted success despite positive value estimates?
Potential Reasons for Uber IPO Failure: Did Lyft (LYFT) IPO Affect Uber IPO Reception?
Many analysts and investors stated even before Uber went public and after Lyft (LYFT) went live on Nasdaq on March 30th, that Uber is in for a skeptical reception due to the bad case of having Lyft losing -24% on the first-day trade.
Lyft had an advantage in oppose to the main competitor, Uber, that went public more than a month after Lyft, however, that didn’t help Lyft get a higher share price at the opening sale.
Lyft started off boldly, but investors soon lost interest in the share, most probably fearing the unprofitability that both Uber and Lyft have.
While Uber has a larger market share in the ridesharing industry, with side businesses such as UberEats with a potential to turn profit, the company is still reporting losses, far from being profitable at this point.
However, the growth potential and bold value estimates should have pushed Uber above 45$ instead of pulling the share price down.
Some market watchdogs indicate that the rising pressure of China-US trade wars is also taking its toll, making investors cautious.