NEW YORK (AP) Uber began trading as a public company at $42 per share Friday, nearly 7% below its initial public offering price on an already volatile day for the markets.
The ride-hailing giant priced shares in the IPO Thursday at $45 each, raising $8.1 billion and giving the company a valuation of $82 billion.
Shares began publicly trading on the New York Stock Exchange about 2 1/2 hours after the markets opened Friday, with investors already feeling jittery over an escalating trade dispute with China.
They recovered to just over $44 by midday as analysts still called the offering a success despite the price drop.
SharesPost principal analyst Alejandro Ortiz said the timing for Uber to start trading was bad given the uncertainty over the trade spat with China. But Ubers story cant be just one day of trading because of its potential to make billions in a growing ride market, he said.
Its going to keep bouncing around for months to come, Ortiz said. Its an important thing to consider if youre an investor and you saw value in the company and its disruptive potential, nothing has really changed in the past 48 hours.
The true story of Uber will come with quarterly earnings reports and at the end of the six-month lockup period in which original IPO investors are prohibited from selling their shares, Ortiz said.
Its not the first time a companys stock has started off trading below its IPO price, not even this week. On Thursday, Axcella Health began trading well below its $20 IPO price and ended its first day at $13.80.
But its relatively uncommon for U.S. technology companies backed by venture capital, like Uber. Over the past five years, just 10% of such companies finished their first day of trading below their IPO price, said Matt Kennedy, senior IPO market strategist at Renaissance Capital, a manager of IPO focused funds.
We were not expecting much of a pop, given the size of the deal for Uber, Kennedy said. The last U.S. company of this size to IPO was Facebook, for example, and you may remember how that traded initially.
Facebook debuted in 2012 and, after technical difficulties delayed its start to trading, it ended its first day just 23 cents above its IPO price of $38.
Unlike Facebook, however, Uber does not make money, Kennedy said. Facebooks stock now trades just below $200.
For his part, CEO Dara Khosrowshahi tried to manage expectations for the first day of trading, telling CNBC that Uber investors are in it for the long ride.
Today is only one day. I want this day to go great, but its about what we build in the next three to five years, he said. And I feel plenty of pressure to build over that time frame.
The IPO price on Thursday came in at the lower end of Ubers targeted price range of $44 to $50 per share. The caution may have been driven by escalating doubts about the ability of ride-hailing services to make money since Ubers main rival, Lyft, went public six weeks ago.
