Trading in shares of ride-hailing giant Uber got off to a weak start, dropping 7.6% from their $45 IPO price. Uber’s rival Lyft was caught in the downdraft, dropping 7.5% on the day.
Early in the day, it looked like Uber was at least partly a victim of weakness in the overall stock market, which has been hit this week by concerns about escalating trade tensions between the U.S. and China. But later, as broad market indices turned positive, Uber stayed weak.
Still, the poor opening day might not say much about the prospects for Uber’s stock over the medium-to-long term, which is the timeframe that really matters. After all, history is full of bad first trading days for shares of companies that later went on to perform well as public companies.
But if it turns out the drop is evidence that public investors are durably skeptical that Uber has a viable path to profitability, it could highlight a potential gap between public market reality and the expectations promoted over the years by the company and the private funders who backed it.