Uber stock fell to a new low on Wednesday after Uber Inc’s (NYSE:UBER) post-IPO lockup expired, meaning inside traders can sell their shares for the first time since the company went public in May.
Uber stock is trading down a further 3.8% today, after falling over 8% yesterday, as inside traders, such as early investors and employees with stock options, dump their shares with the ride-hailing company yet to turn profitable.
Continued Losses Weigh on Uber Stock
“We believe it will be an avalanche of selling from early investors and insiders as this train wreck since the IPO continues,” said Dan Ives, an analyst at Wedbush Securities. “We estimate roughly 763 mm shares will be unlocking with roughly 25% at a big risk of selling over the coming days. It’s been dark days for Uber but after this week, the lockup overhang will be in the rearview mirror and Uber stock should rebound from here.”
The dark days that Ives is referring to came in the aftermath of Uber’s disappointing third-quarter earnings report on Monday, in which the company continued to report steep losses. While the results beat analyst estimates on the top and bottoms lines, a quarterly loss of over $1 billion USD was enough to send investors in Uber stock running for cover. However, the company did offer a timeline for when it expects profitability, targeting total company EBITDA profitability by 2021.
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Most Disappointing IPO Ever?
Uber stock has had a dismal few months since going public in May, dropping over 40% since what some speculators consider the most disappointing IPO ever. The hype surrounding Uber’s offering had many people believing it would be the biggest IPO in the history of the New York Stock Exchange, expected to raise $120 million USD. However, on day one of listing, Uber stock was in the red and managed to raise just under $70 billion USD, almost half the expected figure.
Today’s movement shows that even insiders are growing impatient with the company’s poor performance, raising questions about how far the stock can fall before bottoming out. Uber stock is currently trading at $26.94, a far cry from its debut price of $45.
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