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May 10 (Reuters) – Uber Technologies Inc.'s conservative public offering did not prevent its stock from sinking into their commercial debut on Friday, fueling debate on Wall Street on the issue to know if the result of the most anticipated listing since Facebook Inc. would weigh on the other Silicon Valley Unicorns
Uber has considered becoming public for at least four years. Yet the company specializing in the redemption of funds has chosen a week for its IPO, plagued by market turbulence fueled by the commercial concerns of the United States and China. In addition, the smaller shares of rival Lyft Inc. plunged this week after its first results as a public company.
Uber was the largest group of startups in Silicon Valley who spent years raising money on private tours at record prices. Many of these companies are now looking to follow with their own IPOs. Some, like Uber and Lyft, are not profitable.
The workplace messaging company Slack Technologies Inc. plans to hold a presentation to investors Monday before its direct registration next month. Postmates Food and Food Delivery Platform, owner of WeWork The We Company and online mattress retailer Casper Sleep are among the startups that wish to launch IPOs this year.
"If a venture capitalist wants to spend money, he can do it as long as he wants, but once in public markets you have to show his profitability or his trajectory," he said. said Jordan Stuart, portfolio manager at Federated Kaufmann. who often buys shares of companies during an IPO.
Uber shares ended the day down 7.6% to $ 41.57, even as the S & P 500 reversed its losses and ended in positive territory. According to Dealogic, only about one-fifth of IPOs have ended their first day of trading in the red during the past two years.
Uber announced Thursday that its IPO was in the lower end of its target range, in the hope that this approach would spare Lyft's financial plunge.
Lyft yielded 6.9% Friday, 28% lower than its listing price.
Even so, the world's largest pedal-grin company seems to be attracting more interest from independent investors than Lyft. TD Ameritrade's retail investors made more trades in the first ten minutes of its Uber debut than in the first two and a half hours of Lyft.
Uber had already lowered its valuation expectations twice in the last two months to address investor concerns over growing losses.
While early-stage Uber investors, such as Benchmark, Menlo Ventures, First Round Capital and Lowercase Capital, had casualties during the IPO, some late-stage investors did not perform as well.
Japanese group SoftBank Corp <9984.T >, for example, invested in Uber early in 2018 at $ 48.77 per share. It also bought shares at a significantly lower price in a large secondary transaction.
Certainly, other IPOs have traded well until 2019, including online scrapbooking company Pinterest Inc., vegan burger maker Beyond Meat Inc., and videoconferencing startup Zoom Video Communications Inc. start-ups much smaller than those of Uber who did not run a lot of foamy fundraising rounds.
Uber chief executive Dara Khosrowshahi, who was involved in trading on the NYSE for its inception, tried to calm investors by pointing to the company's growth prospects and plans for expansion.
"My reaction (during the action) is that if we build and build well, shareholders will be rewarded. We certainly do not measure our success over the course of a day, it's really over the years, "Khosrowshahi told Reuters.
The IPO marked a turning point for the 10-year-old company, which emerged after its founders struggled to find a taxi on a snowy night.
Khosrowshahi was accompanied by a team of Uber officials to the New York Stock Exchange to celebrate the event. Co-founder and former CEO Travis Kalanick, who resigned in 2017 under investor pressure, was also seen on the trading floor.
MARRED BY SCANDAL
The company's flotation was hampered by several obstacles, including increased regulation in several countries and wage disputes with its drivers.
Uber also overcame controversies, including revelations of a culture of sexism and bullying during investigations conducted by Uber and the US Department of Justice. After a series of embarrassments, Kalanick was forced to resign in 2017 by a group of investors. Uber then hired Khosrowshahi to run the company.
Uber said it could potentially grow not only in the taxi business, but also as a "superapplication" to provide logistics services, such as the delivery of groceries and food products, the organization of freight transport and even financial services, like Grab. Counterpart of Southeast Asia.
But market experts have struggled to find value for a company that has consistently recorded losses and warned that it could never be profitable. "The business is not profitable, new entrants can enter the market, there is a potential regulatory risk and it is very price sensitive. What is there to like with this opportunity? Said Robert Johnson, a finance professor at Heider College of Business at Creighton University in Omaha, Nebraska.
(Report by Joshua Franklin in New York, Aparajita Saxena in Bangalore and Heather Somerville in San Francisco Additional report by David Randall in New York and Sweta Singh in Bangalore Editing by Saumyadeb Chakrabarty)
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