Uber shares decline for 2nd day in US pre-market trading

SAN FRANCISCO • Uber Technologies Inc shares fell further after a rocky debut last Friday for the biggest initial public offering (IPO) of the year.

The ride-hailing giant dropped 2.1% to US$40.70 (RM169.72) at 5:15am in New York yesterday in trading before US exchanges opened. The San Francisco-based company sold 180 million shares at US$45 apiece last Thursday, and last Friday it never traded above that price, ending the day down 7.6% at US$41.57 even as other stocks gained.

The share slump reflects investor scepticism about the size of the ride-hailing market, Uber’s ability to execute on food and package delivery and its push into autonomous vehicles, said Ygal Arounian of Wedbush Securities Inc. The IPO also comes as investors shy away from riskier assets given US-China trade tensions, said the analyst, who has an ‘Outperform’ rating on Uber and sees the stock reaching US$65 in the next year.

“Uber’s highly anticipated IPO coming out of the gates last Friday was clearly not a ‘storybook start’,” Arounian wrote in a note. Uber is a “prove me situation, and thus, not going to be an overnight success story”.

Ride-sharing peer Lyft Inc fell in sympathy with Uber last Friday, extending its losses to 29% since its March debut. That slide showed no sign of abating yesterday, with shares another 2.3% lower in early trading. Lyft had slumped as last week came to a close after its first set of results disappointed the market.

Uber must execute flawlessly over the next 12 to 18 months, and if it does, a market value of US$100 billion or more is possible, Arounian said. The company should be able to morph its ride-sharing platform into “a broader consumer engine including food and freight delivery”, he said. The company had a US$69.7 billion market value at last Friday’s close.

Jitters in the broader market continued yesterday, with Asian stocks and European shares edging lower as the market awaits details on how China will retaliate to the US hiking tariffs. — Bloomberg