Uber shares fall to record low as stock lock-up expires

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© Reuters. Uber's logo is displayed on a mobile phone in London© Reuters. Uber’s logo is displayed on a mobile phone in London

(Reuters) – Uber Technologies Inc (N:) fell as much as 9% to a record low on Wednesday after shares held by early investors became available for sale following the expiration of a six-month restriction related to the ride-hailing company’s initial public offering.

Uber made its market debut at $45 per share in May, but has since lost more than 40% in value as the loss-making company struggled to retain investor confidence.

Much of Uber’s nearly 1.68 billion outstanding shares were under lock-up. In the IPO filing, Uber had said about 76% of its shares held by insiders, venture capitalists and other investors were under the restriction.

“Some of the sell-off over the last few days has been attributed to the fear of additional liquidity coming into the market as a result of the lock-up expiration today, and people were trying to get ahead of that,” said Matt Novak, managing partner at All Blue Capital, an Uber investor.

However, not all early investors will hit the market to book a profit as they might have bought shares above the current trading price of $25.58.

SoftBank Group Corp (T:), which has invested billions in Uber to become its largest investor, in 2017 bought preferred stock at $48.77 per share and common shares at $32.97 apiece from existing shareholders, including co-founder Travis Kalanick.

The Japanese firm, which took a beating on its investment in WeWork, earlier on Wednesday reported its first quarterly loss in 14 years, hurt by an $8.9 billion hit at its giant Vision Fund.

The ride-hailing firm also counts Benchmark Capital, Saudi Arabia’s Public Investment Fund, Alphabet (NASDAQ:) and Goldman Sachs (NYSE:) among its top investors. None of those investors could be immediately reached for comment.

Uber was the biggest of a group of Silicon Valley startups that have gone public this year against the backdrop of a global stock market selloff, sparked by the trade battle between the United States and China. The company’s latest quarterly report was also disappointing, piling more pressure on the battered stock.

It posted a wider third-quarter loss as it outspend rivals on discounts to lure customers and invested heavily in loss-making new business ventures.

From offering ride-hailing services in more than 700 cities worldwide, Uber has diversified into long-haul trucking, food delivery, developing self-driving cars and offering banking services to its drivers.

However, profit has been elusive.

“Lock-up aside, in the new world where investors require clear paths to profitability, losses, no matter the direction, must be accompanied by clear acceleration and Uber lacks that for the time being,” Needham analysts wrote in a client note on Tuesday.

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