Uber Catches a Lyft as Investors Force Reality Check

Chris Lange

Uber Technologies Inc. (NYSE: UBER) shares continued to take a loss on Monday after an underwhelming initial public offering (IPO) on Friday. Lyft Inc. (NASDAQ: LYFT) faced similar difficulties for its IPO, which occurred back in late March.

Uber originally priced its IPO at $45 per share, though it actually entered the market at $42. That was below the lower end of the expected price range of $44 to $50 Uber gave earlier this week, for its 180 million shares, with an overallotment option for an additional 27 million shares.

With this pricing, Uber had one of the largest IPOs in history. Even after suffering serious losses since coming public, Uber has a market cap of roughly $64 billion. Some of its founders and investors made hundreds of millions of dollars. The sums are so rich that a number of Uber drivers had a strike to protest their low pay.

The army of Uber drivers who are the foundation of the service has not done nearly as well as its investors and top management. A new study shows that their average hourly wages are only the equivalent of $9.21. That is less than what an entry-level worker at McDonald’s makes.

Despite a weak IPO, Lyft’s quiet period recently has ended and many underwriters issued fairly positive calls on the ride-sharing firm. Perhaps Uber will see similar optimism when its quiet period ends. Until then, Uber will have to hope for the best.

Shares of Uber were last seen down about 7.5% at $38.44, in a post-IPO range of $37.17 to $45.00.

Lyft traded down about 5% at $48.58 a share. The post-IPO range is $47.38 to $88.60, and the consensus price target is $73.58.