Uber took a wrong turn for investors when it first started trading on Friday morning, with the ride-hailing company opening at $42 per share, down about 7% from the $45 per share it had pegged its Wall Street to debut at.
The IPO price of $45 per share gave Uber a valuation of $82.4 billion, making it the biggest company to go public in the U.S. since Alibaba went public in 2014.
Led by chief Dara Khosrowshahi, a team of Uber executives rang the opening bell on the New York Stock Exchange on Friday — then waited more than two hours before the company’s shares officially started trading.
Before going public, Uber disclosed last month that it pulled in $11.3 billion in revenue in 2018, an increase of 72% year-over-year. But, that marked a slowdown in growth for the company, a year after Uber’s revenue had more than doubled from the previous year. And to maintain its dominance, Uber has spent big; the company reported that it lost $1.8 billion last year, a record amount for a startup the year before it went public.
Launched in 2009, the San Francisco-based company spearheaded the ride-hailing revolution with cheap rides and an aggressive expansion plan. Uber had raised $28.5 billion as a private company and was last valued at about $75 billion.
But the company has spent much of the last two years looking to revamp its image, after co-founder and chief executive Travis Kalanick was forced to resign amid several accusations of workplace sexual harassment. The exec’s exit culminated a rocky 2017 for Uber: a clip of Kalanick lecturing a driver on “responsibility” went viral early that year, and later, the company fired an executive who was accused of looking at the medical records of an Uber rider who was raped in India. In August 2017, Uber hired Khosrowshahi, the former CEO of Expedia, to be its new chief executive.
Tasked with stewarding the company towards its Wall Street debut, Khosrowshahi was rewarded with a $45 million compensation package last year. Despite moving away from its reputation for a toxic work culture under Khosrowshahi, though, the company still has a contentious relationship with many of its drivers, who’ve bristled over their classification as contractors rather than employees. The company settled a $20 million lawsuit earlier this year where drivers pushed the company to be recognized as employees, although Uber was able to continue labeling them contractors after the settlement. And earlier this week, Uber drivers from London to San Francisco protested what they called unfair wages and work conditions.
Lyft, Uber’s chief competition, went public in late March, but has since seen its market cap drop from about $27 billion to about $15 billion on Friday. Ahead of going public, Uber said in a regulatory filing it has had to curb driver fares and bonuses to stay competitive in many markets.
“[A]s we aim to reduce driver incentives to improve our financial performance, we expect driver dissatisfaction will generally increase,” Uber’s S-1 filing said.