FP’s Guide to the Uber IPO
Six things to read as the company goes public.
On Friday, Uber stock started trading on the New York Stock Exchange at $45 per share, giving the company a value of more than $82 billion. The stock’s performance over the next several months might finally provide an answer to the question that has plagued the company since its founding in 2009: Will it live up to its promises to become the future of transportation, or will ongoing financial losses, trouble with regulators, and discontent among its own drivers eventually bring it down?
To show how the company got here—and where it might go next—we’ve collected our top reads on ride hailing around the world.
In the United States, the benefits and drawbacks of Uber are hotly debated. But it’s no surprise, writes Foreign Policy Managing Editor Ravi Agrawal, that such discussions are largely absent in developing nations. “In poorer nations, there is less controversy—largely because the benefits for the workers, and countries, are so much more obvious.” In India, for example, the income Uber drivers bring in puts them in the top 10 percent of earners around the country. The company, he writes, has also created 350,000 new jobs and Ola, a local rival, more than a million. Perhaps most importantly, “beyond job creation and salaries, there is a hidden byproduct of the gig economy that uniquely benefits developing countries such as India: formalization of the labor market.”
To be sure, there are concerns as well. The writer Henry Johnson points to safety issues that plague Uber and Ola’s motorbike programs. “Despite Indian helmet laws in certain regions,” he writes, “motorbikes account for twice as many fatalities on the road than cars do. And for a country that in 2013 lost 231,000 lives to deadly traffic collisions—well over 600 per day—that means a high degree of danger for users of the new motorbike service.” The more shared bikes on the road, the more potential for disaster.
In neighboring China, the challenges are slightly different. According to Viola Rothschild, a research associate at the Council on Foreign Relations, widespread protests by gig drivers—increasingly desperate thanks to sharp competition and poor regulation—may threaten Beijing’s hold on power. “The twin pillars of legitimacy for the Chinese Communist Party are economic growth and political and ideological control,” she writes. “The government is struggling with a potential slowdown in growth and the need for industrial transformation. The gig economy offers the temptation of economic success—but also the threat of an increasingly immiserated and angry workforce locked outside of the rewards that have kept the Chinese middle class on the side of the party.”
For Uber, China in particular has been a difficult market. After facing stiff competition by well-funded local services, detailed in a 2015 article by the journalist Warner Brown, the service was pushed out of China in 2016. In a Foreign Policy roundtable, Charlie Custer, the founder of 2non.org, argues that Uber’s exit was bad news, precisely “because it’s hard to pinpoint [what] the company did wrong.” Indeed, as the China observer Kaiser Kuo points out, Uber “studied the failures of their predecessors carefully, and avoided many of their missteps. They created a highly autonomous China entity and gave their people on the ground extensive decision-making power. … They offered services tailored to the Chinese market. And all things considered, they didn’t do at all badly.” Angela Bao, an investor at Idea Bulb Ventures, too, sees a silver lining. It isn’t “the end of Uber’s story in China,” she explains, since Uber China investors got a 20 percent stake in the local competitor Didi Chuxing.
Elsewhere around the world, Uber has faced similar attempts at expulsion. In France, for example, officials have tried to regulate it and other services out of existence. “It was 1937 when a sudden influx of drivers led authorities in Paris to set a quota of 14,000 taxi licenses. Seventy years later, the population of Paris has grown by 20 million-plus, but city authorities refuse to issue more than a few thousand new licenses,” the writer Andrew Weiner notes. “So it’s perhaps no surprise that the cabbies of Paris are up in arms about the arrival of Uber.” And in Mexico City, protesters have “hurled flour, eggs, and rocks,” the reporter Siobhan O’Grady writes, “at the Uber drivers that licensed Mexican taxi drivers see as an illegal threat to their livelihoods.” Such outpourings of anger, she explains, have been repeated in England, Germany, and Brazil as well. Although most protests have died down more recently, the company still faces persistent questions about its treatment of employees and drivers, its effects on competitors, and its financial sustainability.
Back in New York on Friday afternoon, Uber stock began to rally after a steady decline throughout the company’s first few hours of trading. And the uneven performance recalled nothing so much as the jagged path the company has traveled since it was founded just a decade ago.