Uber (NYSE: UBER) has undoubtedly been one of the rookie class’s biggest disappointment this year. The ride-hailing global leader issued its IPO in May this year and since then, it has been on a downward trend, shedding billions off investor money.
The stock closed at $30.33 on Monday, proving that unicorns can also fail to fly.
Since the listing, about a third of the firm’s value has gone up in smoke, casting further doubts on the company’s viability. Its younger rival Lyft is also having one of those lousy trading periods.
Most will remember how both IPOs were overwhelmingly subscribed, revealing the reality of how IPOs are as risky as they are exciting.
So to answer the big Q: An exciting investment of $1,000 in Uber would be worth about $666.70 today.
But Uber and Lyft are not the only struggling listings; according to market info, about 64 of the 153 stocks to go public on a major stateside exchange are currently trading below IPO price.
While stats show that Lyft is growing much faster than Uber, it has dipped 36% compared to its bigger rival’s 33% drop.
The taxi sector has been growing fast in the last few years. Uber’s recent quarterly reported showed the company’s revenue rose by $3.8 billion or 30%. The biggest share of the revenue growth is credited to its diversification plan, including Uber Eats and its nascent freight logistics platform.
It is mostly expected that the sector will face regulatory challenges during these initial market penetration periods. In German and London for instance, most ride-sharing companies have been met with several setbacks that seem to be slowing down their growth plans. And soon, it could get expensive for these companies to operate in California.
Both Uber and Lyft have been struggling to attain profitability amid their timelines for getting past their loss-making phases.
However, some of these companies may undergo a lot before they attain their targets. They may need to prove the scalability of their business models, shed some segments, among other measures.
A recent report indicated that Uber could be shedding its deficit-saddled Uber Eats business in India.