The most anticipated IPO for years – that of Uber – finally happened. And many see it as a flop:

Although setting the IPO price at the lower end of its range, Uber’s shares nonetheless tanked almost 8% on its first day. 

There have been plenty of articles analysing this, so we will not bore you with another ‘fact-driven’ analysis. Just some of our thoughts: 

  1. In ride-hailing, Uber faces major competition mainly in the US (Lyft), India (Ola) and Latin America (Didi). So far Uber is not facing the encroachers from all fronts that Didi is tackling in China. 
  2. In addition to those, governments could still be a big issue – there are many legal issues which are still left in the grey area (e.g. Uber’s status in Thailand). While the status quo is probably a good solution for Uber, an election in many countries could change that. 
  3. Didi’s threat to Uber largely depends on the former’s domestic priorities than competitiveness or attractiveness of Latin America’s market per se. 
  4. We predicted that Uber and Careem would merge, in our Middle East predictions for 2019. This was proven right in March. It was not that difficult to make this prediction – Uber needed to end that battle to focus on its IPO. 
  5. Uber would need to continue to look for (and solidify) revenue sources – it needs to try different things to increase its value. Some of these attempts will succeed. 
  6. It should also try the super app approach that Grab is piloting, in certain markets. 

By the way, here is Lyft’s performance on the same day:

Lyft's performance on Uber's IPO day

 

 

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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