The ride-sharing company UBER IPO comes to market on Friday, 5/10/19, and collapses nearly -8%. Uber lays an egg. Uber driver's Fahad, Ajay, Zach and Seth veer off the road into a ditch. Rival LYFT has crashed and is in the body shop for repairs. Perhaps investors are losing confidence in the business model.
When humans interact, many problems can develop. Uber and Lyft are susceptible to lawsuits, unwilling criminal activity, labor strikes and car accidents. All that to make a couple bucks. The drivers would be smart to simply undercut Uber rates and take care of that customer themselves in the future. In other words, a driver can use Uber to simply find his own clients that he can deal with directly and cut Uber and Lyft out of the transaction. The business model appears flawed.
Nonetheless, millennials do not want to own cars (they will as they get older even though they do not realize it now) which spawns the ride-sharing craze. The sweet spot for these drivers is Friday and Saturday night as they usher drunkards home from nightclubs and bars during the hours of 10 PM to 4 AM; however, once in a while a puke clean-up is needed (and the drunk is charged a fee for the vomit clean-up). Uber and Lyft are not glamorous businesses.
The UBER IPO did not come to market until noon; that is late. In the first minute, price catapults higher to tag 45.00 the HOD. The cheers quickly died as price collapsed to 41.06, the LOD, only minutes later. The market makers step in to save the day and support the IPO. UBER recovers higher and investors are breathing a sigh of relief in the early afternoon. But the back-slaps and smiles turn to hand-wringing and frowns as UBER sinks like a stone.
The first day of trading ends down 3.43 points, -7.6%, to 41.57. It is obviously important whether price breaks up through the 45.00 HOD, or, collapses below the 41.06 LOD.
MS distributed UBER shares to clients who are now screaming bloody murder. SoftBank owns Uber shares and is sold off in Asia trading overnight. The drama continues with Uber's second day of trading set to begin in a couple hours. In pre-market trading, Uber is puking in the backseat. UBER is down -4.4% to 39.73 taking out the Friday low. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added 7:15 PM EST: Monday, 5/13/19 is a stock market bloodbath. UBER is bludgeoned -11% to 37.10 with a LOD at 36.08 which is the new line in the sand. LYFT needs a lift as it sinks -6% to 48.15 with a new low for the stock at 47.17. Investors are shunning the ride-sharing vomit cars.
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