Uber Founder Travis Kalanick Sold $350 Million of His Stock Holding This Month; the Count is now Over $2.1 Billion

This is not investment advice. The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.

Ever since the expiration of Uber’s (NYSE:UBER) post-IPO lockup period on 6th of November, the company’s founder Travis Kalanick has been on a tear.

As per the filing with the SEC, Mr. Kalanick unloaded a proportion of his Uber’s stake worth $350 million this month. These shares were sold in multiple transactions at prices ranging from $27.87 to $28.54. As a refresher, since the expiration of Uber’s lockup period, Mr. Kalanick has cumulatively sold Uber’s shares worth $2.1 billion.

Uber is Announcing a New Feature That Will Allow You to Explore Restaurants

It is important to note that the insider sale of shares is hardly unusual given that most executives receive the bulk of their compensations in the form of equity and, consequently, engage in periodic liquidations. However, an abnormal pace of liquidation may raise a red flag vis-à-vis the management’s level of confidence in the business.

According to the Bloomberg Billionaire’s Index, the proportion of Mr. Kalanick’s $3 billion net worth that is tied to his stake in Uber has gone down from around 75 percent during the pre-IPO phase to around 20 percent now. Interestingly, the 43-year-old founder has already offloaded the entirety of Uber’s stock that he indirectly owned. Now, it seems that he has set his sights on significantly culling his directly owned stake in the company.

Of course, the insider transactions of Uber’s other executives are also noteworthy. The company’s co-founder Garrett Camp has also reduced his stake, albeit, at a reduced pace. To date, he has sold shares worth about $35 million, a fraction of his $2.1 billion holding in the company. However, it seems that another insider is taking the polar opposite approach. Chief Executive Officer Dara Khosrowshahi actually bought additional shares worth about $7 million on November 18.

This development comes as Uber is facing upheaval on multiple fronts. In November, the Transport for London (TfL) stripped Uber of its license for the second time since 2017, thereby, leaving London’s 45,000 drivers associated with the ridesharing giant in a limbo. Uber, for its part, has challenged this decision in a court. However, if the court upholds this termination of license, the company could potentially lose annual revenue of up to $480 million.

Additionally, California has now approved a law, whereby, temporary and contract employees are to be granted social protections such as the minimum wage enforcement and unemployment benefits provided that such employees regularly work full-time hours and perform duties central to a business. For obvious reasons, this law has profound negative implications for Uber as it will be forced to provide minimum wage compensation to its drivers which, in turn, will significantly drive up costs in an industry environment characterized by stagnating growth.

Finally, investors are growing increasingly concerned about Uber’s worsening cash burn problem. As an illustration, the stock is down 31.46 percent year-to-date while the S&P500 has soared over 10 percent during the same period.