Uber Is Latest Firm to Flounder Post-IPO

Uber Technologies reported $3.9 billion of stock-based compensation costs related to its May IPO, making up most of its $5.23 billion loss in the most recent quarter.


Photo:

Richard Drew/Associated Press

Uber Technologies
Inc.


UBER -5.66%

joins an illustrious group Friday as its shares tumble.

Many of the most anticipated technology IPOs in the past decade have also disappointed investors after reporting their first quarterly results as public companies. Shares of

Facebook
Inc.,

Twitter
Inc.,

Snap
Inc.

and

Lyft
Inc.

all tanked after reporting results in the early months after their respective IPOs, illustrating how difficult it is for companies to live up to the hype—and counter the expenses of an offering—after a splashy debut.

Uber shares were down 6.3% to $40.25, by midday Friday.

One reason for a hiccup in earnings post-IPO is the high cost related to these companies’ recent offerings. Uber reported $3.9 billion of stock-based compensation costs related to its May IPO, making up most of the ride-hailing giant’s $5.23 billion loss in the most recent quarter.

Another reason earnings tend to disappoint is that tech companies often spend a lot of money through promotions to drum up support (and sales) ahead of the IPO. Snap’s first results as a public company in May 2017 revealed that the Venice, Calif.-based company was struggling to maintain strong user growth as it worked to fend off competition from Facebook’s Instagram. Lyft shares fell in May after the San Francisco-based ride-hailing company’s revenue growth had been hampered as a result of competition from Uber.

If Lyft is any indication, Uber could turn a corner. Lyft’s second-quarter results as a publicly traded company topped analysts’ estimates for both active riders and revenue per rider, and its loss on adjusted earnings was significantly less than analysts expected. Total expenses also declined.

Despite this good news, Lyft shares remain roughly 15% below their $72 IPO price. Uber’s stock also wallows about $5 below the level at which the company priced its shares in its offering.

Both ride-share companies are still a long way from the success of tech leader Facebook. Its shares closed down 12% at $23.71 after the social-media giant reported its first results as a publicly traded company in July 2012. On Thursday, the stock closed at $190.16.

Write to Corrie Driebusch at corrie.driebusch@wsj.com

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