Uber Could Be Valued at $120 Billion in Year's Biggest IPO

1. Uber Could Be Valued at $120 Billion in Year's Biggest IPO While most individual investors were probably hoping to see a climb up on Uber stock prices after its IPO (initial public offering), the reality is that the stock price is continuing to fall. Last Friday, when Uber had its first day as a publicly traded company, it was already three dollars below its IPO price which had a starting price of $42. For latest Stock Market News, visit Smart Money Gains. Uber ended last's Friday trading at $41.70 and we can definitely say that it was a major flop. Besides individual investors who were trying to profit from Uber and got a hit, investors as a whole lost $655 million, a record. The Saudi Arabian Public Investment Fund (PIF) was the one who took the biggest hit losing more than $200 million just in one day. Why Did Uber Price Behave This Way? While a lot of investors, especially novice investors, were hoping to see Uber hitting new highs after the IPO, the reality is that a lot of investors were already expecting what ended up happening. After all, you just needed to do some stock market research to discover that there were many reasons why this could happen. According to the latest financial news, Uber has incredibly slim margins that no one believes are sustainable in the next five to ten years. In addition to that, the company reported operating losses of $3 billion. Even though Uber continues to grow its user base, the truth is that the net income dropped a bit in the fourth quarter. As you can imagine, it's not easy for Uber to increase prices without losing a lot of their current customers. In addition to all this, Uber seems to be always in the middle of controversy. Either because of harassment allegations, legal battles with drivers, and even revolving door of C-suite executives.

2. Besides, investors could also see what should be coming when Lyft stock was such a failure. Get the right Stock Market News & Analysis here! Lyft Stock Performance Since both Uber and Lyft are ridesharing companies and they entered the market almost at the same time, it was natural to assume that Lyft managed to do well, Uber would follow its steps. However, just like Uber, Lyft's performance wasn't good. The reality is that besides the industry, both companies have a lot of similarities. Lyft also lost a lot of money last year (almost a billion dollars) and has no plan to reach profitability and it has many legal battles with its drivers. Above all, and this is a fact that we haven't still mentioned, is that the industry may be threatened by transportation automation. After all, according to the latest stock market news, Tesla and Google are developing their own driverless cars on the road. So, both Uber and Lyft only have two options: they join them or they are out of the market. The Growth At Any Cost Period Should Be Over While up to recently, you saw many IPOs rising in price even when companies weren't profitable, this seems to have gotten to an end. After all, the stock market needs to show that there is a positive correlation between profitability and stock performance. And in the case of Uber and Lyft, it is getting there. None of the companies should have entered the market at such a high price. And they are now paying for it.