IPO Price Dips on First Days Attributed to Market Concerns
Uber’s IPO last Friday didn’t bring in the $100 million executives had hoped, instead reducing the price to $45 per share in the wake of the disappointing Lyft IPO a month ago. The stock dropped in value 11.7% its first day, bringing in $72 billion for Uber, despite protests on Wednesday by drivers went on strike over low pay. The stock price dropped again on Monday after a market plunge in response to U.S. tariff policy.
Uber lost $3 billion in 2018; Lyft lost $1.1 billion in the first quarter of 2019. Neither company has a definitive plan for when it will turn a profit, betting that their autonomous vehicle technology, which is not yet ready for use.
A story on Wired.com points out that both Lyft and Uber lose staggering amounts of money each year, but expect to turn profits once their autonomous vehicles are on the road⏤effectively cutting out the drivers who have helped build the company’s businesses. A story on Salon.com described how the Uber platform exploits its workers, paying them a lower fee than what they would be entitled to if depreciation of their vehicles and maintenance were factored in, as they are in taxi and limo businesses.
“An Economic Policy Institute report from 2018 found that after taking into account vehicle expenses and depreciation, Social Security and Medicare taxes paid after the fact, the average Uber driver wage was $10.87 per hour. Basic statistics knowledge suggests that many drivers would make below their local minimum wage, which varies nationally from $7.25 per hour to $15 per hour in some cities in California,” the Salon story reported.
The National Labor Relations Board weighed in yesterday on Uber drivers, affirming that they are contract employees and have fewer protections than employees under the law if Uber cuts their assignments or drops them.
Billionaire investor Mark Cuban told CNBC Uber and Lyft waited “too long” to do their IPOs after they began doing business and now are no longer “growth” companies.