Why is ex-Uber CEO selling his shares
Stock Market Analysis

Why Is Uber’s Co-Founder Selling His Shares?

Uber’s ex-CEO Travis Kalanick has been in the press a lot lately as reports continue to emerge that he looks set to offload his entire stake in the ride-sharing giant.

It is no secret that the ride-sharing business model has been called into question in recent months, as companies such as Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT) struggle to find a path to profitability. 

More worrying news then this week as reports emerged that ex-Uber CEO Travis Kalanick has sold even more of his shares, bringing his total to $2.5 billion since a lockup period expired last month. Kalanick is now left with less than 10% of his holdings left. 

Why would Kalanick sell his shares?

Uber has been one of the worst-performing tech companies in a year which has seen the likes of Slack (NYSE: WORK) and Peloton (NASDAQ: PTON) struggle since going public, while WeWork’s IPO collapsed completely. 

Uber recently released an unprecedented report, which revealed a disturbingly high number of violent and sexual crimes among its drivers and users, which did not help the situation. Likewise, this year has seen the company lose a number of important licenses, including its largest European market, London. 

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Apart from these one-off events, the stock had already been in freefall since its IPO in May, which has seen its price drop more than 40%. Uber’s market cap is currently below $50 billion, having gone public worth closer to $80 billion.

We are starting to see now why Kalanick is dumping his shares. 

Is there hope for ride-sharing?

Despite its very poor performance, Uber is not even in the top 15 of the worst-performing stocks of 2019, such as Macy’s (NYSE: M), TripAdvisor (NASDAQ: TRIP), or Kraft Heinz (NASDAQ: KHC). 

However, the ride-sharing business model has not appeared to be working for any of the major players, which calls into question the model in general. Uber has been working on self-driving car technology, which may hold some hope considering its other ventures such as ‘UberEats’ have not paid off. Such a venture would prove very costly but could also be a promising revenue stream if pulled off. 

Only time will tell.

MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.

Jamie Adams
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.