Read the following answers, then explain whether you agree or disagree with the assessments. Also, Can you identify additional economic and market factors that may have influenced the results of the Uber IPO?

Did the company value the IPO correctly?

In the case of Uber, it seems as if the company overvalued its initial public offering. The IPO for Uber was in May of 2019. On the initial offering, stock share prices started at $45. Since the initial offering, stock prices have struggled to reach the $45 mark; currently, the stock is trading at $35.97. Since that time, the overall return for IPO investors is -30.6%. When a company determines the IPO price, they generally hire an investment bank to analyze the company and create an overall value. Some of the reasons for valuation are overall demand for the shares in the company and "including industry comparables, growth prospects, and the narrative of a company" (Gad, 2020). When Uber's valuation occurred before the IPO, it was determined to be $82.4 billion. Upon IPO, Uber was able to raise only $8.1 billion.

Was the company able to generate additional value for shareholders via the IPO?

Upon the initial IPO, Uber stock price was valued at $45 per share and started selling at $42. Uber was able to generate approximately $8.1 billion", although the estimate was that they would be able to generate roughly $10 billion. "Uber set a placeholder amount of $1 billion but did not specify the size of the IPO. Reuters reported this week that Uber plans to sell around $10 billion worth of stock at a valuation of between $90 billion and $100 billion."(Franklin, 2019). Again, they fell short of the initial estimate by approximately $2 billion. What economic and market factors potentially influenced the results of the IPO? Several factors come into play when discussing IPO results. Some of the elements are "political elections, investor demand, weak or unproven businesses, and intense competition from among global exchanges are all major factors" (Schacht, 2019). In the case of Uber, the direct competitor Lyft had gone public previous to the Uber IPO and therefore was a fair comparison for how Uber would perform. Additional factors included the fact that the industry was still in dangerous territory regarding labor-related issues, specifically regarding whether employees are legal subcontractors of the business. There has also been a fair amount of controversy surrounding Uber, including labor-related issues and upwards of 6000 sexual assault accusations; this, of course, is problematic on many levels from an investor's standpoint. Furthermore, in general, the industry is not a proven success as it is still in the infancy stages of development.

Do you think the IPO was a success based on your analysis?

Overall, I believe the IPO for Uber was not as successful as the company had hoped. The stock price opened at $42., three dollars below the estimated $45 value. In the end, it closed "down 7.6% from the opening price" (Clark, 2019). Overall, it appears that Uber was overvalued for the market, and it has yet to make a profit for the original stock investors.