Uber’s stock fell 7.6 percent on Friday, its first day as a publicly traded company. The slide continued on Monday, with Uber’s stock price falling by an additional 10.7 percent.
It’s a worrisome time for the long-haul industry. As recently as last October, some Wall Street banks were estimated that the company could be valued as high as $120 billion. At Monday’s closing price of $37.10, Uber was worth about half that, at $62 billion. (The company is worth around $68 billion on a “fully diluted” basis, which counts stock options and other assets that could eventually be converted into shares.)
Monday wasn’t a good day for the broader stock market either, but the Standard & Poor’s 500 fell a modest 2.4 percent.
Uber’s top American competitor, Lyft, fell 5.7 percent, valuing the company as a whole at $13.8 billion. The company’s stock has lost a third of its value since its March IPO.
Uber has never made an annual profit, and in recent quarters, the company has been losing more than $1 billion per quarter. The company has justified those losses by citing its rapid growth. Some of those losses have reflected efforts to expand into new markets such as aggressive research and development funding.
Until recently, investors seemed happy to continue covering Uber’s losses in hopes of owning what they hoped would be a very profitable tech company. Indeed, Uber raised $8.1 billion in additional cash in its initial public offering—a sum that would last the company about two years at its current burn rate. But Wall Street’s patience won’t last forever. Uber CEO Dara Khosrowshahi will face growing pressure to succeed on Uber’s long-promised path to profitability.
Lyft is in a similar predicament. It’s a very small company, so your turnover, losses, and cushion are all relatively small. But like Uber, Lyft has seen mounting losses with rapidly increasing revenue. And before it’s too long, the company needs to demonstrate that it can turn a profit.