The Uber logo on a vehicle. Picture: REUTERS/ROBERT GALBRAITH
The Uber logo on a vehicle. Picture: REUTERS/ROBERT GALBRAITH

Bengaluru — Shares in Uber Technologies were set to fall another 7% on Monday, doubling losses since its poorly received Wall Street debut on Friday and raising more questions about investors’ faith in its ability to make profits.

The move, which came amid a wide-ranging selloff on global financial markets spurred by more US-China trade tension, pointed to shares opening at $38.54, valuing the company at almost $11bn less than Friday’s debut price of $45. By mid-morning in New York, the shares were down 6.62%.

Before going public, Uber lowered its valuation expectations twice in two months to address investor concerns over the company’s mounting losses, and priced its initial public offering (IPO) at the low end of the targeted range.

Rival Lyft, which went public at $72 a share on March 29, has lost a third of its market value since and was down 3% at $49.50 in trading before the bell.

Both IPOs took place against a backdrop of renewed concerns on Wall Street over global growth due to the trade tension, though US stock markets are all far higher than they were at the end of last year.

“The current narrative relating to the social economic nature of the ride-hailing segment is negatively having an impact on the shares of both Uber and Lyft,” said Zephirin Group analyst Lenny Zephirin.

While both companies are trying to find ways to lower driver costs to become profitable, drivers went on a protest in several US cities this month demanding job security, livable incomes and a cap on the amount ride-hailing companies can collect from fares.

Wedbush analyst Ygal Arounian said investors need to be patient as Uber reaches full monetisation potential with its ride-sharing platform and a broader growth engine with Uber Eats, Uber Freight and autonomous driving initiatives.

“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 plus market cap is warranted,” Arounian said.

Both Zephirin and Wedbush have top ratings on Uber stock.

Reuters