This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Ride-hailing application Uber's six-month lockup period following its IPO has now expired. In its third-quarter 2019 earnings, Uber (NYSE:UBER) reported a $585 million net loss, which is down from the $458 million loss that the company had reported in the year-ago quarter. Its CEO Dara Khosrowshahi hopes that his company will achieve full profitability by the year 2021. Now, following its lockup expiration, Uber's shares are being traded aggressively on the market. Take a look below for more details.
Uber's Trading Volume Exceeds 6.5x Daily Average Following Lockup Expiration
As per its prospectus, 1 billion of Uber's shares sold at the time of the company's IPO were locked, meaning that investors were prohibited from trading in them for a six-month time period. The stock has fallen since then, as while new investors purchased the shares at a price of $45/share, the shares opened at $26 today.
Now, it's looking as if investors are eager to sell Uber shares as fast as they can. According to the data, Uber's trading volume has jumped to 78 million within the two hours that have passed since markets opened today. This is 6.6 times (rounded to 7x) the daily trading volume of the company's stock. However, Uber's share price has jumped from $26.06 opening to $27.03 at the time of writing, but this price continues to drop as it appears that sell, sell, sell is on the agenda today.
Uber continues to be overvalued since the company is yet to turn a profitable Net Income. Price-to-earnings for the ride-hailing application is at 30.5x, suggesting that investors expect the company to grow significantly in the future. Uber's price-to-book (tangible) is more down to earth, with a 3.2x value. Uber's been touting the merits of Uber Eats for a while but this quarter, Uber Eats fell below market expectations by reporting $3.6 billion in bookings.
Uber (NYSE:UBER) expects net revenue to rise in its fourth quarter, but given that the stock is down by 3.6% already, it doesn't look as if Wall Street has faith in the company. Uber's backer SoftBank hasn't seen a good year either as SoftBank is sitting on more than $800 million in paper declines. SoftBank backed WeWork also crumbled due to liquidity concerns earlier this year, and the investment fund's woes simply don't want to end.
Thoughts? Let us know what you think in the comments section below and stay tuned. We'll keep you updated on the latest.