The Trouble With Unicorn IPOs, Starting With Uber's

Maybe Uber Technologies waited a little too long to go public

- Pat Regnier

Uber Technologies Inc.’s stock market debut on May 10 was the biggest, most eagerly anticipated U.S. initial public offering in years. The ride-hailing company raised $8.1 billion through the share sale and at the moment of going public was valued at more than $75 billion. After years of watching from the sidelines as Uber grew, ordinary investors finally had a chance to buy in.

Just not at the price Uber and its bankers thought it was worth. On the stock’s first days of trading, it fell as much as 19% before narrowing the loss to about 8% as of May 15. Now, across Wall Street, questions are flying. When they were vying to lead the IPO last year, banks including Morgan Stanley had privately told Uber that it could be worth as much as $120 billion. Why did they set expectations so high? When it came time to finally determine the IPO’s price, was the syndicate led by Morgan Stanley too aggressive? And did it steer too much stock to big investors that made hollow pledges to hold it for the long term?