Uber began trading on the New York Stock Exchange Friday at $42 per share.
Uber priced its shares at $45 Thursday night, toward the low end of its target range of $44 to $50 per share. That gave Uber a valuation of $75.46 billion at its IPO on a non-diluted basis, still well below the $120 billion it was reportedly seeking when news first broke it was preparing to go public.
When your financial picture is only viable when viewed through the most rose-colored of glasses, it's not the best idea to enter the public market the same week your closest competitor had a nightmarish first-ever earnings report and the same morning that the president passive-aggressively tweets out that he's essentially started a trade war with China.
And yet, Uber hath done it.
We all went to bed with the notion that Uber had priced its IPO at the low end of $45 so that it could pop. Then we all spent this morning watching the market decide that even the low end was a bit high for a company that doesn't seem interested in making a profit. And watching the IPO price drop $3 in a matter of minutes made sense considering that Uber is looking to raise capital at the end of a week that saw the S&P drop more than 70 points. The whole thing feels terrifyingly logical.
As bad as this sucks for Uber, we can't help but see this as a positive development. We've been emotionally reduced to viewing the market through a prism of a nurse working a psych ward. Trump's objectively meaningless tweets on China have been treated like actual data to such a degree that they have become actual data. No piece of negative macro data can't be overcome by a handful of okay earning reports and the highlight of this month has been the IPO of fake meat. Watching the market take something of a pass on Uber gives us a glimmer of hope that logic is not entirely dead in finance.
We fully expect Uber to drop into a range where algos are waiting with Buy orders [$39?] and Uber will indeed pop back into a nonsense range. But at least we're getting some healthy cynicism up front, and providing Uber with a real object lesson in actual dynamic pricing.
Uber is taking the punishment of a market that has finally found its sanity. And all it took was a trade war between the world's two largest economies.
Enjoy the weekend!