Uber's IPO ride less bumpy than rival Lyft's

12 May 2019 - 00:14 By AFP

Uber made its Wall Street debut on Friday, starting with an eye-popping $82bn (about R1.16-trillion) valuation in a milestone for the ride-hailing industry amid lingering doubts about its business model.
CEO Dara Khosrowshahi and an Uber team rang the opening bell of the New York Stock Exchange after Uber raised $8.1bn in its IPO, which was among the largest yet for a tech company.
Despite the staggering valuation, Uber dialled back some of its earlier ambitions for a value exceeding $100bn after a rocky start for US ride-share rival Lyft, which went public in March.
Though Uber has lost billions since launching its first rides in 2011 in San Francisco, it aims to develop a global brand to transform local transportation and eliminate the need for individual car ownership.
Whether Uber can drive to profitability using this model as it disrupts traditional taxi and transport services is a key question.
"For the ride-sharing companies, their IPOs are only the beginning," said Matt Kennedy, a strategist at Renaissance Capital.
"They now enter public markets with billions in cash and a plan to conquer global transportation while managing to become profitable."
Kennedy said Uber faces "a lot of risks" but that its pricing was less aggressive than that of Lyft, which has lost more than 15% of its value since its March offering..
Daniel Ives of Wedbush Securities was upbeat on Uber despite the lower valuation than expected.
"We view Uber's conservative pricing as a smart and prudent strategy coming out of the box as it clearly learnt from its 'little brother' Lyft, and the experience it has gone through over the past month."
Some of the risks surrounding Uber and its rivals were highlighted on Wednesday as thousands of drivers turned off their apps in a US-wide strike over pay and working conditions.
The strikes, targeting both Uber and Lyft, highlighted a dilemma for ride-share firms, which have faced challenges from regulators and traditional taxi operators for using a business model relying on independent contractors.
"While we aim to provide an earnings opportunity comparable to that available in retail, wholesale, or restaurant services or other similar work, we continue to experience dissatisfaction with our platform from a significant number of drivers," Uber said.

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