On Thursday, May 9, Uber entered the New York Stock Exchange as a public company by setting an IPO of $45 per share. Although the ride-share app raised $8 billion, experts were disappointed by how low the company priced each share. Uber is now valued at $82.4 billion.
Money Control says Uber’s IPO was “underwhelming” as the company chose the bottom end of the IPO pricing spectrum—$44 to $50 per share.
Uber’s IPO was slated to be the biggest IPO in 2019, but the company’s share price was about one-third less than experts predicted.
Uber deliberately chose a more conservative share price to avoid making the same mistake as Lyft, a competing ride-share mobile app that was the first of its kind to become a publicly traded company.
In March, Lyft set its IPO at $72 per share. But as its shares were oversubscribed, meaning people were demanding more shares than the company was willing to offer, the company opened at $87.24 per share.
However, Lyft’s share prices plunged below its IPO and closed at $69, 12% below the IPO price, explains Business Insider.
Uber is a decade-old ride-share mobile app that is live in 63 countries and over 700 cities.
The app has 91 million monthly active users and 3.9 million drivers who have logged 10 billion trips globally.
In 2013, it launched in India and became competition to domestic ride-share app Ola. Uber currently runs in 40 Indian cities, and the country is responsible for 11% of the company’s revenue.
After the IPO launch, Uber is valued at $82 billion. Uber CEO Dara Khosrowshahi says Uber is going to transcend its current operations as a ride-share app and expand to other services.
Impact of Uber’s IPO on Indian drivers
Just before Uber’s IPO launch, drivers registered on the app in San Francisco protested outside the company’s headquarters for higher wages, more benefits, and better representation.
Mostafa Maklad, an Uber driver, told TechCrunch, “Uber, year after year, keeps cutting the rate and how much money they pay drivers… Right now, to make the same money I used to make when I started, you have to drive between 70 and 80 hours a week …”
Makland is also a member of Gig Workers Rising, an organisation working for the rights of people who work on gig-based platforms like Uber, Lyft, and TaskRabbit.
Gig Workers Rising is demanding that Uber and Lyft give their drivers a living wage, set more transparent policies on wages, tips, and fare breakdowns, provide retirement, healthcare, and leave benefits, and more representation.
Makland said that even temporary and independent contractors deserve to be “treated with dignity”.
In India too, Uber drivers planned a strike in anticipation of the IPO.
Mint reports that Uber drivers in India are complaining about reduced cash incentives, pressure to pay off EMIs on car loans, and inability to afford fuel. Like their international counterparts, they also have to work long hours just to make ends meet.
In 2017, Uber India cut incentives to drivers ahead of the IPO to improve its valuation. According to Reuters, in its IPO filing, Uber said, “As we aim to reduce driver incentives to improve our financial performance, we expect driver dissatisfaction will generally increase.”
Rajesh Raut, a former cook who became an Uber driver, said his earnings increased when Uber had first launched but have now become meagre, resulting in him defaulting on car loans.
“There is no benefit in driving for Uber… my life was much better just as a cook,” Raut told Reuters.
In contrast, Uber’s executives benefited from the IPO launch. Moreover, the future of its drivers feels uncertain and dichotomous as the rumblings of self-driven cars become louder alongside Uber’s expansion plans, such as Uber Health, Uber Freight, and Uber Bike.
Rhea Arora is a Staff Writer at Qrius.