Uber IPO stock lockup expires Wednesday, but no gold rush in sight

Back when Uber’s Wall Street debut was eagerly anticipated, with talk about a $120 billion valuation, the end of its lockup period — six months during which early investors and employees are prohibited from trading — seemed as if it would trigger a gold rush.

The lockup expires on Wednesday and could unleash a flood of new trades. But the notion that it will send the Bay Area real estate market soaring as hordes of new multi-millionaires buy homes seems overwrought.

Uber’s initial public offering in May started at a valuation of $75 billion, well below expectations. Even on the first day, it fell to $69.8 billion, and since then the stock has been on a long slide, reflecting investors fears that the San Francisco ride-hailing company may never turn a profit.

Tepid quarterly results reported on Monday sent the stock to an all-time low on Tuesday — although the $1.16 billion loss on revenue of $3.81 billion was better than analysts had expected. Uber closed at $28.02 Tuesday, down 9.85% for the day, and down 37.7% compared to its IPO price of $45.

Analysts give varying estimates of just how many shares will be freed up on Wednesday. Bloomberg reported estimates ranging from 763 million to 1.7 billion shares becoming eligible for trading.

But at least 545 million pre-IPO shares are underwater, according to Uber’s public filings. People holding them may wait to sell rather than lock in their losses now.

Before Uber’s debut, some had predicted that newly rich Uber employees would swarm real estate sales, causing San Francisco home prices to skyrocket. However, the big underwater contingent means expectations are more muted.

If anything, some analysts fear that a big sell-off could exacerbate Uber’s woes.

“An avalanche of selling as early investors and insiders hit the bid … remains a major Street worry around near-term pressure,” Wedbush analyst Daniel Ives wrote in a note Friday.

Meanwhile, some Uber and Lyft drivers view the lockup expiration as a fitting time to protest Silicon Valley insiders cashing in while drivers earn considerably less. Drivers plan protests Wednesday outside the San Francisco office of GV, the venture capital arm of Google parent Alphabet that was an early Uber investor ; the Atherton mansion of Bill Gurley, an Uber baord member and venture capitalist; and the Los Angeles home of Uber co-founder Garrett Camp.

Carolyn Said is a San Francisco Chronicle staff writer. Email: csaid@sfchronicle.com Twitter: @csaid

Article source: https://www.sfchronicle.com/business/article/Uber-IPO-stock-lockup-expires-Wednesday-but-no-14811816.php

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