Inside Uber’s troubled I.P.O.

The story of Uber’s disappointing I.P.O. — its fall from a potential $120 billion blockbuster to a much-smaller debut that fell even further — is one of mismanaged expectations with plenty of blame to go around.

Trouble began with overambitious valuations. Bankers from Morgan Stanley said last fall that the company could be worth around $120 billion. That number quickly leaked, setting expectations of an I.P.O. that would gush wealth.

The $120 billion figure was important for Dara Khosrowshahi, who became Uber’s C.E.O. in 2017. His contract says that if the company is valued in the public market at $120 billion or more for at least three months in the next five years, he will receive a payout of $80 million to $100 million.

But Uber’s business has been suffering. Its once-meteoric growth rate slowed, particularly after SoftBank, which went on to invest in Uber, and Didi Chuxing, a Chinese ride-hailing frenemy, invested in the company’s Latin American rivals.

Investors resisted the lofty valuation, because of the company’s slowing growth, the struggles of its rival Lyft on the markets, and because many already owned shares in Uber. Buying in the I.P.O. meant adding to their holdings — a tough sell, especially at a high price.

Some board members felt they weren’t fully briefed on how Uber executives planned to pitch the company to investors on the I.P.O. roadshow. Only the board’s pricing committee, which included Mr. Khosrowshahi, focused on the offering.

And Uber’s valuation steadily drifted downward. Its I.P.O. was priced at $45 — but demand from investors still wasn’t there. As of yesterday’s close, the company’s shares were at $39.96.

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