Uber Technologies Inc., was valued at $82.4 billion as it launched its initial public offering (IPO) on Thursday.
The ride-sharing company priced its offering towards the lower end of the range it had targeted as executives hoped this would help stem a potential plunge in stock prices like it happened to the price of Lyft shares.
Uber’s IPO has been the most anticipated offering since Facebook’s debut on the market in 2012, but its low price highlighted a sort of underwhelming finale.
The firm raised $8.1 billion, with its UBER stock priced at $45 per share. The pricing just shied off the bottom of a range of $44-$50 the company had set. But despite this, the IPO marks a defining moment in Uber’s business venture, having grown in leaps over the last ten years to become the largest cab-hailing company in the world.
The firm’s IPO valuation is nearly one third lower the value predicted by its investment bankers in 2018. However, that figure is a bit higher than the $76-billion valuation the firm received in the private market.
Reportedly, Uber’s initial public offering was oversubscribed. Nonetheless, the company decided to go with a lower price in a bid to stem any would-be repeat of the debacle that befell rival Lyft’s IPO on its trading debut in March this year.
Lyft’s stock was strongly priced pre-trading but plunged terribly on trading.
Uber also settled for a lower price as it sought to hedge in big mutual funds, which always go prefer lower prices.
The IPO’s underwriting banks, which included Morgan Stanley, Goldman Sachs, and Bank of America, likely had to factor in the stocks trading as they priced it. Negotiating a good price would help accord the stock an upside when it begins trading on Friday.
Uber is lined up to start trading on the premier New York Stock Exchange (NYSE) today, May 10, 2019, under the “UBER” symbol. Uber lost $3 billion in 2018, and it appears the success of its IPO will be pegged on how well it performs going forward and whether the company can turn some profits.