Uber shares fall as early investors get first chance to sell

Levi Sumagaysay, The San Diego Union-Tribune on

Published in Business News

Uber shares fell sharply Wednesday, the day early investors and insiders could sell their stock in the ride-hailing company for the first time.

Big declines in Uber's stock price are nothing new, though. Since Uber went public in May in a disappointing debut that still ranked as one of the biggest by an American tech company, its shares have declined nearly 40%. But Wednesday's sell-off came after the expiration of the lockup period, the time set after a company's initial public offering that restricts big shareholders from selling their shares.

Uber stock ended the day at $26.94, down almost 4%. The shares have been on a roller coaster ride, trading below their IPO price of $42 since August. They had hit a record low the day Tuesday, as investors reacted to the company's release of its quarterly results Monday.

But Wedbush Securities analyst Dan Ives saw cause for new hope: "The end of the lockup could mark the start of brighter days for the stock after this massive jaw-dropper sell-off over the past few months," he said. Ives noted that it has been a "horror show" for investors since Uber's IPO.

The stock might've fallen more steeply Wednesday, but Ives said that out of the more than 700 million shares Wedbush estimated were set to be unlocked, more than 500 million were underwater.

Profitability remains elusive, although Uber CEO Dara Khosrowshahi said during this week's earnings call that despite another huge quarterly loss (nearly $1.2 billion in the third quarter), he expects the company to turn an adjusted full-year profit in 2021. He cited growth in Uber's rides business and expressed optimism about Eats, its food-delivery business. He also mentioned that the company is focused on efficiency and cost control.

Public investors are "probably pleased" by the 2021 profitability target, said Tom White, analyst with D.A. Davidson. "The company didn't provide a ton of specific detail about how it plans to get there, though," he said.

Meanwhile, Uber Chief Financial Officer Nelson Chai said during Monday's earnings call that the company has had "very good and constructive dialog with long-term shareholders."

Uber also is grappling with regulatory uncertainty, including a new California law that would likely require it to classify its drivers as employees instead of independent contractors. The company is fighting AB 5 with a campaign, which it launched last week along with Lyft, DoorDash and Instacart, to bring the issue to the state's voters.

Drivers on Wednesday called attention to the disparity between their pay and the wealth for early Uber investors by protesting up and down the state: at early investor Bill Gurley's house in Atherton, at Google Ventures' office in San Francisco and at Uber co-founder Garrett Camp's house in Los Angeles. The protests were organized by Gig Workers Rising and Mobile Workers Alliance, which said they expected more than a hundred drivers to gather at each location.


"(Investors) make billions and millions while we make less than $9 an hour," said Mostafa Maklad, who drives for Uber in San Francisco and was at the protest in front of Gurley's house Wednesday. "They live in fancy mansions while a lot of drivers have to live and sleep in their cars."

One such driver is Steven Payan, who drives for Lyft but has also done so for Uber. The former taxi driver lives in Sacramento and drives in San Francisco, Oakland and elsewhere in the Bay Area. He sleeps in his car -- a Nissan Rogue Sport from Lyft's driver rental program -- and goes home to his 4-year-old daughter every few days.

"I drove three hours to stand in solidarity with other workers to show them they're not alone in addressing this issue," he said from the protest in front of Gurley's house. "We're getting exploited."

Gurley is a partner at Benchmark Capital, which has an 8.5% stake in Uber. Alphabet/Google has a 4.2% stake. Camp, who came up with the idea for Uber, owns 4.6% of the company's shares.

Ahead of the lockup expiration, a handful of insiders including Chief Financial Officer Nelson Chai and Chief Legal Officer Tony West sold thousands of dollars worth of shares, according to filings with the Securities and Exchange Commission.

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