Former Uber exec says it slumped at IPO because investors don't 'understand the Uber story,' and predicts a comeback fueled by autonomous technology
- Uber's first day of trading was not a rousing success, with stock slumping almost 8% from its IPO price.
- Emil Michael, a former high-ranking executive at Uber, told CNBC this happened because investors do not properly understand how valuable the company is.
- He said that the company's work on autonomous driving technology will drive future growth and reinvigorate the share price.
- Uber CEO Dara Khosrowshahi said that it will take more than one day to judge Uber, and said factors like the trade war with China had dented performance.
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A former Uber executive trying to explain the company's lackluster performance on its first day of market trading blamed the slump on investors who "don't understand the Uber story."
Emil Michael, a former senior vice-president of business for Uber, said that the market was failing to appreciate the value of less-visible parts of the business, like the autonomous technology division, which he said would drive future growth.Michael was speaking with CNBC's "Closing Bell" show as Uber ended its day at $41.57 per share, a 7.62% fall from its IPO price of $45.
The former exec left Uber during a tumultuous management shake-up in 2017 that also saw the exit of CEO-founder Travis Kalanick, but retains stock in the company.
You can watch his interview here:
"So I think what you're seeing is investors still have to understand the Uber story a bit. I think what investors haven't seen.... they say: 'Oh, Lyft's trading at this let's just multiply by that, and you get Uber."
"And what they're missing is the autonomous technology division, which was just valued at $7.5 billion dollars two weeks ago, with a billion-dollar cash infusion, the equity stakes it has in the other ride-sharing companies around the world... as that comes out I think you'll see some recovery."Prior to the market open on Friday, Business Insider noted that the timing for Uber offering was extremely unfortunate, and it can be argued that performance was dragged down by wider market turbulence.
Speaking to the Financial Times, Uber CEO Dara Khosrowshahi gave a similar analysis, saying: "One day isn't going to measure our success... You can't control the week in which you went public. We had a situation with the president and China that created a lot of volatility and uncertainty."
According to Business Insider's Troy Wolverton, the IPO "wasn't calamitous, it was a disappointment. And its effects could linger long after the closing bell sounded on its first day of trading."