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Uber opens at $42 per share

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Re: Uber opens at $42 per share

#201

Post by spullara »

chollida1 wrote: post #3

Some notes from watching Uber open: - if it closes below $45(its IPO price) it will be the first time since 2008 that the happened for a major IPO - TD Ameritrade executed more orders in the first 10 minutes of trading than they did for the first 2.5 hours with Lyft. - Uber is 9% of all trading at TD Ameritrade, retail loves this stock, - market is down today, which isn't helping Uber but its probably not much of a f…

PSTG closed below its IPO price in 2015 with $4B market cap. How are you classifying IPOs?

Re: Uber opens at $42 per share

#202

Post by scarface74 »

diminoten wrote: post #123
throwaway66666 wrote: post #82

Unprofitable companies are the only ones that really benefit from IPOs. An IPO is basically a way for the company to raise money, but tis time straight from the public. Usually when it gets harder and harder for them to attract private investors. The IPO listing basically guarantees that they won't take the public's billions and run. Successful companies with perfect cash flows (think of Github, Valve, IKEA) always t…

No offense, but of course IPOs benefit unprofitable companies. The entire point of an IPO is to raise capital to invest back into the company. Why would you ever have an IPO if you didn't have a plan for that cash, and why would you have an IPO if you had all the cash you needed?

Because the initial investors want to sell their ownership stake.

Re: Uber opens at $42 per share

#203

Post by [deleted] »

fooker wrote: post #179
almost_usual wrote: post #170

Earlier quoted context omitted.

Facebook was also profitable and had about 10x the number of users compared to Uber pre IPO https://www.forbes.com/sites/greatspeculations/2019/04/22/ub...

Uber has paying users. Facebook had advertisement targets. Doesn't make too much sense to conflate the two.

[deleted]

Re: Uber opens at $42 per share

#204

Post by ggcb »

EpicEng wrote: post #136
sytelus wrote: post #87

Earlier quoted context omitted.

Amazon didn't turned profit for first 5 years or so after IPO. If you go back 15 years down the history, you will find many articles/analysis doubting if they would ever become profitable. However no one doubted that online retail was the future and brick-and-mortar stores will increasingly become part of the history. I see a lot of parallels here. No one doubts anymore that app-based cabs are the future and traditio…

Comparing Uber to Amazon is just silly. Amazon had/has a sustainable, robust business model. They chose to re-invest. Uber burns money like it's going out if style and has no clear path to profitability.

this is so obvious, yet there are several highly voted comments here insanely comparing uber to amazon.

I sense a strong astroturfing to bump uber here.

Re: Uber opens at $42 per share

#205

Post by xenadu02 »

justinv wrote: post #146
rwmj wrote: post #125

Earlier quoted context omitted.

I'm confused by this comment. Is it the underwriter's job to intervene in the market after the initial sale? I thought they simply guaranteed that all the initial shares are sold.

Yes. The lead underwriter needs to stabilize the price post-IPO. When $unicorn_company IPOs, the underwriter actually sells more shares than the IPO company. If the price starts to drop below the originally listed price, the underwriter steps in to purchase these shares back at the IPO price to stabilize it. It's generally an optics play - how bad would it look if you as a bank, who wanted to continue to offer IPOs,…

There's a limit to how much they can prop up the price though. If the market really hates the stock they won't be able to save it.

Re: Uber opens at $42 per share

#206

Post by stevenwoo »

zackbloom wrote: post #134
mojomark wrote: post #128

Earlier quoted context omitted.

> Unprofitable I hear you, but... Meh, they say invest in companies who make products you use. I use the shit out of Uber and I don't plan on stopping even if the price goes up a bit. Now, I'm upper middle class, and I understand this isn't everyone's mindset, so I have no idea how the rest of the world feels. However, there are locatios, like my crappy hometown where I grew up not so fortunate circumstances, where h…

Who says to invest in companies who's products you use? That does not seem like great advice. You should invest in companies who are undervalued by the market in your opinion, not just because you like the product but because you think they have a good business around it.

I believe it's a paraphrasing of Warren Buffett's "invest in what you know". https://abcnews.go.com/Business/wireStory/latest-berkshire-h...

Re: Uber opens at $42 per share

#207

Post by MattSteelblade »

asaph wrote: post #81
anpago wrote: post #64

Earlier quoted context omitted.

When your shoeshine person gives you trading tips..

Who still gets their shoes shined?

In case you're not aware, it's in reference to a famous quote by Joe Kennedy, "You know it's time to sell when shoeshine boys give you stock tips. This bull market is over." As the story goes, less than a year before Black Tuesday, a shoeshine boy told him to "...buy Hindenburg."

Re: Uber opens at $42 per share

#208

Post by jimmywanger »

drocer88 wrote: post #199
chollida1 wrote: post #103

Earlier quoted context omitted.

> "market is down today, which isn't helping Uber but its probably not much of a factor" > It's actually a big factor. I assume you are trolling but just in case.... the SPY is now up on the day and Uber is still below its IPO price, so I guess we can put to rest the idea that a down market is a big factor in Uber trading below its IPO price.

Market is up today (as of 3:20pm EST). Über and Lyft are down > 6% . SV Unicorn hype aside, there's not a big moat around running a jitney cab company.

Hmmm. Never heard that term before. I usually hear "gypsy cab".

Re: Uber opens at $42 per share

#209

Post by hn_throwaway_99 »

Retric wrote: post #192
chollida1 wrote: post #35

Earlier quoted context omitted.

edited the comment, $45 was the IPO price, meant it will be the fist time since 2008 that a major IPO closed below its IPO price on the first day of trading.

Uber is currently well below it’s IPO price. Historically, that’s not uncommon.

> Historically, that’s not uncommon.

Really? I was under the impression that closing below your IPO price is quite rare indeed. Do you have other data?

Edit: actually, just saw a NYTimes article with info that it is indeed rare:

Since 2000, only 18 companies valued at more than $1 billion and listing on American exchanges have opened below their I.P.O. price. On average, tech stocks have jumped — or “popped,” in Wall Street parlance — 21 percent on their first day of trading over the past 24 years, according to Dealogic.

Re: Uber opens at $42 per share

#210

Post by resters »

BoiledCabbage wrote: post #195
resters wrote: post #97

Earlier quoted context omitted.

The investment bank sells a lot of shares to its own preferred clients. If the price then drops (because the initial offering price was too high) those preferred clients lose money. So the bank has every incentive to price it low, and usually does. So when the market goes even lower, we know that the IPO was done out of desperation and that early investors who had influence over the IPO price were eager to dump some…

> So when the market goes even lower, we know that the IPO was done out of desperation How is that the correct conclusion. It sounds like the correct conclusion is they still over estimated the market price. Nothing about desperation for or against.

> It sounds like the correct conclusion is they still over estimated the market price

The bank has every incentive not to do that. The bank must juggle the needs of its various constituencies, preferred investors (who provide capital expecting not to have it lose value right away), the firm (which wants to raise capital) and existing investors (who may want to liquidate).

If a bank routinely over-prices IPOs, then preferred investors will stop providing capital. If the bank routinely under-prices IPOs, then firms will choose other banks to underwrite their IPOs.

In addition to the above, the investment bank owns a lot of inventory and strategically buys and sells in order to help keep the price close to the expected price. When this doesn't happen, it might be because the bank couldn't afford to constrain the price movement and had to settle for the bad optics.

This is how the system is supposed to work, but the main reason an IPO would be over-priced (all things considered) is if the existing investors had too much say in the price, since this tarnishes the bank's credibility for future IPOs events.

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