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Uber shares down 12 percent after IPO, raising investor concerns

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CEO Dara Khosrowshahi is optimistic that despite the lull, Uber has the required capital to improve margins and profits

Uber shares after IPO dropped 12 percent on Monday, adding to investor concerns about the company’s profitability. Its most anticipated IPO debut performed below expectations. Uber CEO Dara Khosrowshahi said that he expects the stock will succumb to pressure over the coming months.

“Sentiment does not change overnight, and I expect some tough public market times over the coming months. But we have all the capital we need to demonstrate a path to improved margins and profits,” he said.

Uber’s share prices after IPO has worried investors. The stock hit a low of $36.58, valuing the company at about $14 billion. This is less than its pricing range of $45 per share. Uber’s IPO downfall is quite similar to Lyft’s. In March, Uber’s rival Lyft went public at $72 per share. Its share went down 7.3 percent at $47.38.

According to Bloomberg and Reuters, Khosrowshahi wrote a memo to the company’s employees stating that Uber’s stock ‘did not trade as well as we had hoped post-IPO’.

Twice in the past two months, Uber lowered its value expectations in an effort to console investor concerns. These concerns rise from a series of losses incurred from the company’s previous corporate decisions, and then its IPO performance.

According to Senior Analyst and Vice President at D.A. Davidson Tom White, “In the last couple of weeks, we have noticed investors questioning more about how good of a business model is ride sharing really.”

Since Uber’s IPO last week, its market capitalisation has dipped to $61 billion. Also, Trust Portfolio Senior Manager Daniel Morgan said that several investors are worried of the booking fee costs that is shared with the drivers.

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