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Matt Levine

Uber Misses the Enchanted Forest

Also long-termism, travel expenses and retail options trading.

In a certain light, Uber Technologies Inc.’s valuation peaked last fall when investment bankers pitching to underwrite its initial public offering told Uber that it could be worth $120 billion when it went public. That was not a firm offer or anything, just a number that they wrote down in their pitchbooks, but at least it was a big number. By the time Uber actually filed to go public, the rumored valuation was down to $100 billion, and it launched the IPO late last month with a price range of $44 to $50 per share, or a market capitalization of up to $84 billion.

This was a little disappointing: Even the high end of this range was barely above the per-share valuation that Uber had gotten in its recent private funding rounds. But Uber’s banks telegraphed that the range was meant to be conservative after competitor Lyft Inc.’s disappointing IPO, and anyway you can always raise the price range if demand is strong. Presumably the intention was to use the bargain pricing to get a lot of orders, build a strong book of demand, and then push the price range up. And then the banks rapidly put out noises about how there was plenty of demand for shares in that price range, and indeed, enough demand to price the IPO at the high end of the range. But, they hinted, they would not be raising the range: After Lyft Inc. raised its price range and saw its stock drop after the IPO, Uber wanted to be conservative and price within the range. Then it leaked that Uber would price not only in the range, but at the midpoint of the range.