Uber Earns The Crown For Having The Largest First-Day Dollar Loss In IPO History

Uber IPO
Traders work on the floor at the NYSE in New York (Photo: Reuters)

Despite all the hype for what was the largest tech initial public offering (IPO) in 2019, share prices for the ride-hailing giant Uber on its first day of trading was the worst ever seen in US IPO history. The company's shares dropped by more than 11 percent on Monday; essentially costing early investors billions of dollars in losses.

Uber officially went public on Friday, pricing its stocks at $45 a share. This gave the company a $75.5 billion market capitalization. While the amount is quite significant, it still fell way below the $120 billion private valuation the company had in October of last year.

The company's ride-hailing rival Lyft initially went public six weeks prior to Uber's IPO. Lyft instantly posted a 7.6 percent loss during its stock market debut, which translated to about a $655 million in lost valuation. Analysts had initially predicted that the same will likely not happen to Uber, given its size and capital when compared to Lyft. However, that has not really been the case.

As the first day of public trading ended, Uber stocks were priced at only $37.10 a share, earning it the record of being the largest first-day dollar loss in the country's IPO history. Prior to Uber taking the highly unwanted crown, the record for the largest first-day dollar loss belonged to a Verizon subsidiary called Genuity. The company went public during the dot-com bubble more than two decades ago and had lost more than $277 on its first day in the stock market.

It is not yet clear if Uber will be suffering the same fate as its rival Lyft, which has seen it's stock prices stumble since its debut. Lyft's stocks are currently trading 33 percent below its initial IPO price of $72 per share. Some analysts believe that Uber's IPO simply came at a very inopportune time as the global markets continue to be very volatile due to the current political and economic climate. 

The recent escalation in the trade negotiations between the United States and China has rocked global markets, with most investors now shying away from equities and risky assets. Global markets and their respective major indexes have fallen in response as both countries continue to duke it out with major policy changes.

However, some analysts argue that tech startups such as Uber and Lyft are simply not attracting investors due to the fact that they are drastically short when it comes to revenues. Both companies are currently not making any money as it stands and it remains to be seen if they will ever become profitable. 

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