Uber Is a Market Bellwether for All the Wrong Reasons
The point when investors start demanding profits from money-losing tech companies would mark the end of low inflation.
Uber’s IPO offers an insight into the U.S. economy.
Photographer: Johannes Eisele/AFP
Uber Technologies Inc.’s initial public offering performed poorly in its first day of trading Friday, falling as the broader market rose. Lyft Inc.’s debut in the stock market didn’t do well, either. Is there something about internet-based, money-losing ride-hailing that makes it a bad business? In its modern incarnation, yes.
Unprofitable IPOs are nothing new. I came of age in the markets in the late 1990s when there were plenty of profitless companies going public. But the difference is that back then, startups always had a plan to become profitable. Go far enough out in the pro formas and you could see a path to profitability. With Uber, there essentially is no plan, except some Hail Mary of an idea concerning self-driving cars, where Uber is way behind.