Market experts predict that the colossal ride-sharing company Uber will crash on November 6, 2019.
A very specific date, don’t you think? What could possibly go wrong that day? Typically, bankrupts are unpredictable – they happen at their own pace, at their own time. So, what’s on that particular date that would threaten a business as large as Uber?
Well, something very critical is about to happen on the 6th of November. But before we talk about the alleged damnation of the largest ride-hailing company in the US.
It all began when Uber pulled off the fourth-largest IPO in world history recently this year. Investors, experts, and market enthusiasts alike set high expectations for this company given that it is one of most disruptive and fastest-growing companies ever. In fact, its revenue exploded from zero to $11.3 billion in a decade.
Hence, the hype over the public offering was incredibly massive, attracting thousands of investors around the globe.
However, much to Uber’s disappointment, the IPO was a complete disaster. The company dropped 7.6% on its first day of trading on the New York Stock Exchange Friday. Until now, Uber still struggles to find a solid footing.
The company ended up selling $8.1 billion worth of stock, with $42 per share. Sure, $8 billion dollars is still a huge amount of money, but compared to its $82 billion valuation, it’s nothing but an embarrassment.
And the horror doesn’t end there.
The Lock-Up Phenomenon
Despite the on-going downward trend of Uber’s performance in the market, major shareholders can’t sell their shares right away. The shares, therefore, are “locked up”. And this phenomenon usually lasts for either 90 or 180 days.
Once the lock-up expires, these shareholders are free to sell.
And that’s exactly what most investors do.
Let’s take Twitter, for example. On May 6, 2014, its lock-up period ended. The market is seeing 500 million worth of shares. And when investors dumped their shares on the market, Twitter crashed to 18% that day.
And for Uber, that fateful day happens to be on November 6th. Experts believe Uber will most likely plummet to another 25% on the lock-up expiration date.
But if it doesn’t, rest assured taxi firms and companies worldwide will be marking November 6th as the day they can finally sleep soundly at night.