Here’s the existential challenge for Uber and Lyft: They’re losing a lot of money now in a largely unregulated world. If the laws change, and drivers become employees, it’s hard to imagine either company will ever make big profits?
Uber's IPO stalled out yesterday, stunning both Silicon Valley and Wall Street, Axios' Dan Primack reports.
Uber lost nearly $6 billion in market capitalization (value of the company’s outstanding stock) in its first five hours as a public company.
No, this is not normal for a highly anticipated IPO.
Why it matters: Other money-losing unicorns will now watch to see if Uber can navigate into calmer waters, or if they need to begin scrambling for life vests.
Uber got hit by a confluence of negative events, some of which were outside of its control:
The Dow was already down more than 300 points before Uber's first trade, due largely to President Trump's imposition of higher tariffs on Chinese imports. Stocks recovered later, but investor sentiment was lousy during the time when an IPO would typically pop.
The world is a vampire: North Korea. Iran. Venezuela. Pick your geopolitical poison.
Uber went public at the end of the stock market's worst week of 2019.
Lyft already had investors running scared, having earlier in the week reported disappointing Q1 results and warning of "peak losses" in 2019.
The big picture: Uber loses more money than any other company to ever go public.
Uber has argued that it's the next Amazon, which also spent years in the red.
The statue of Fearless Girl stands in front of the New York Stock Exchange on Uber's first day of trading. (Photo: Mark Lennihan/AP)
The scene: Uber founder and ex-CEO Travis Kalanick wanted to help ring the bell, but was banished by current CEO Dara Khosrowshahi, Axios first reported.
Kalanick watched with his father from a side balcony before heading a block away to celebrate with early Uber colleagues at The Bailey Restaurant NYC.