May 12, 2019

Uber's underwater investors

Illustration: Sarah Grillo/Axios

Uber's IPO this week came with predictable headlines about the rich getting richer — after all, when a company goes public at a valuation of more than $80 billion, that's what usually happens. This particular offering, however, created a whole lot of losers.

By the numbers: From 2016 onwards, per PitchBook, Uber raised $15.35 billion at $48.77 per share; it then raised another $8.6 billion in its IPO on Thursday at the slightly lower price of $45 per share. Those numbers dwarf the $5.6 billion that Uber raised before 2016. As of the close of trade on Friday, the market has now spoken: Uber shares are actually worth $41.57.

  • The bottom line: A whopping 81% of the $29.55 billion in equity that Uber has raised is underwater. IPO investors have lost $655 million, while investors from 2016 and 2018 have between them lost $2.27 billion.
  • Losers: Investors who bought Uber shares 3 years ago have lost 15% of their money, before fees. The opportunity cost is even greater: Investors in the S&P 500 have seen their money grow by 50% over the same period.
  • Winners: Lyft shares are also trading well below their IPO price, which didn't help the Uber offering. But so far all of Lyft's pre-IPO investors remain in the money. The most that any of them paid was $47.35 per share.

Why it matters: Uber is the ultimate minotaur — a company where billions of dollars of private-market funding were supposed to create a self-fulfilling prophecy of dominance and market power. It hasn't worked out like that. To make billions of dollars out of Uber, like Benchmark Capital did, the secret is to invest millions of dollars in the Series A and then allow other investors to invest the extra billions needed to scale the business and fund ongoing losses.

Our thought bubble, from Axios' Dan Primack: Uber loses more money than any other company to ever go public. It's the sort of thing that everyone ignores until they don't.

Go deeper: Uber's IPO got caught in a perfect storm

Go deeper

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 10:30 a.m. ET: 1,363,365— Total deaths: 76,420 — Total recoveries: 292,425Map.
  2. U.S.: Total confirmed cases as of 10:30 a.m. ET: 368,533 — Total deaths: 11,008 — Total recoveries: 19,972Map.
  3. Trump administration latest: Peter Navarro warned White House colleagues in late January about the massive potential risks from the coronavirus.
  4. Public health update: Funeral homes are struggling to handle the pandemic.
  5. 2020 update: Wisconsin Supreme Court blocks the governor's attempt to delay in-person primary voting until June.
  6. Tech update: YouTube has removed thousands of COVID-19 videos for violating policies related to spreading medical misinformation.
  7. What should I do? Pets, moving and personal health. Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

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Stephanie Grisham out as White House press secretary

Photo: Chip Somodevilla/Getty Images

White House press secretary Stephanie Grisham is departing her post to return to the East Wing as First Lady Melania Trump's chief of staff, the White House announced Tuesday. The news was first reported by CNN.

Why it matters: Grisham will leave after nine months without ever having held a formal press briefing. Her departure follows the arrival of new White House chief of staff Mark Meadows, who has a chance to overhaul a communications shop that's kept a low profile since President Trump ended the tradition of daily press secretary briefings.

WeWork board sues SoftBank

Illustration: Sarah Grillo/Axios

SoftBank was sued Tuesday morning by a special committee of WeWork's board of directors for alleged breaches of contract and fiduciary duty related to SoftBank's decision to cancel a $3 billion tender offer for WeWork shares.

Why it matters: SoftBank is viewed by many in the private markets as an unfaithful partner. If this reaches trial, that reputation could either become widely cemented or reversed.