PROFITABILITY WILL BE THE NEXT CHALLENGE
Uber went public last Friday but the company is far from making money. The initial public valuation is well below the $100 billion or more the company was reportedly shooting for as recently as last month. And it’s only about two-thirds of the $120 billion number that investment bankers were hyping last year.
Other factors surely weighed on Uber’s IPO. At the end of last month, the company updated its IPO documents to include its preliminary estimate of its first-quarter results. The report wasn’t good. The ride-sharing app operated at a loss of $3 billion in 2018 after losing more than $4 billion the previous year.
But that’s not all the bad news Uber is contending with today. The stock market has plunged this week, and many of the major indexes are now down over the past month. Investors are growing increasingly worried about market volatility. This despite the fact that IPO managers try to time IPOs to avoid such periods.
On top of that was last week’s strike by Uber and Lyft drivers. Though it probably didn’t have much impact on Uber’s financials, the labor action highlighted the growing discontent among the people who deliver its core service and the pressure it’s under to increase their pay.
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