Uber’s stock continued its bad run on the second day of trading, falling by 10.7 percent to close at $37.10 after debuting on the New York Stock Exchange last Friday when it fell 7.6 percent. So the company is already down by close to 20 percent within the first two days, wiping over $10 billion off from its initial market cap, which now stands at $62.2 billion. Uber was estimated to be valued at $120 billion by its underwriters Morgan Stanley and Goldman Sachs last year.
Monday wasn’t a good day for American tech stocks with most of them closing in red due to escalation in the US-China trade war but Uber’s double-digit fall, according to different analysts has a lot to do with the general skepticism around the ride-hailing market in general and Uber’s ability to turn a profit in the long-run. Uber’s rival Lyft was down 5.75 percent, Apple 5.81 percent, Facebook 3.61 percent, and Alphabet and Amazon 2.66 percent.
Lyft’s stock, since its IPO debut in March, has lost close to 30 percent.
“While it might be easy to call out ‘market conditions’ for these failings, the unvarnished truth is that these declines represent a fundamental disconnect between public and private valuations,” wrote a Wall Street Analyst and commentator Nicholas Colas in a note to clients on Monday about poor performances of Uber and Lyft.
Uber CEO Dara Khosrowshahi sent an email to Uber employees on Monday, addressing the company’s poor debut at the NYSE.
“Like all periods of transition, there are ups and downs. Obviously, our stock did not trade as well as we had hoped post-IPO. Today is another tough day in the market, and I expect the same as it relates to our stock,” he said in the email that was first shared by a New York Time Tech reporter on Twitter. “Sentiment does not change overnight, and I expect some tough public markets over the coming months. But we have all the capital we need to demonstrate a path to improved margins and profits. As the market sees evidence, sentiment will improve and as the sentiment improves, the stock will follow. Remember that Facebook and Amazon post-IPO trading was incredibly difficult for those companies. And look at how they have delivered since.”
There are some analysts who apparently share a similar sentiment about the company.
“While it will take time for the stock to settle and Uber must execute flawlessly over the coming 12 to 18 months, we believe a $100 billion+ market cap is warranted,” said Ygal Arounian, an analyst with Los Angeles-based Wedbush Securities.