Investor Fred Smith was dismayed to discover that the fact Uber has never turned a profit and is unlikely ever turn a profit is having a negative impact on the stock’s value.
“To be honest, I did wonder how a company that stayed in business by subsidizing every single ride with investors’ money could survive on the long term; maybe they planned to lose a little on every sale, and make it up on volume?” asks Smith, who admits he is not seasoned investor, but blogs for Electronic Communications Network Broker.
Uber’s stock had plummeted 42% since the IPO in May. On November 6 shareholders blocked from selling their shares were allowed to “unlock” and sell them; the stampede to the exit surprised even market watchers who had actually witnessed rats jumping off sinking ships.
“Before Uber released its IPO, my investment manager told me that if I wanted to get in on the ‘ground floor’ I needed to purchase the stock without seeing a prospectus,” Smith recalls. “No one told me the ‘ground floor’ had a basement.
“But then, Uber announced that in 2022, self-flying helicopters and would be delivering puppies and free ice cream. So, I’m selling my house to buy more stock!”