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.

Dec. 24, 2019

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.

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.

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