Will Uber Trump Face-Off Impact Uber IPO and Uber Stock?

Uber IPOCustomers’ Backlash Could Impact Uber

In the latest round of Uber IPO news, Uber Chief Executive Travis Kalanick pledged $3.0 million to help drivers impacted by the Donald Trump immigration order after facing public backlash over Uber’s decision to continue running its services despite a taxi strike at Kennedy International Airport.

Travis Kalanick posted on his Facebook page that Uber would create a $3.0 million legal defense fund to help drivers affected by the Trump immigration order. The fund is created to help drivers with immigration and translation services. He also said that the ride-hailing company will provide 24/7 legal support to drivers stuck outside the country and compensate them for lost earnings. (Source: “Uber fights immigration order — and #DeleteUber hashtag — with $3-million legal fund for drivers,” Los Angeles Times, January 29, 2017.)

However, many social media users saw the action as too little too late. The company had come under fire a day earlier for advertising on “Twitter” that it was operating at New York’s John F.Kennedy International Airport during a taxi strike protesting the executive order.

This misstep resulted in the rise of the Twitter hashtag #DeleteUber, which encouraged customers to delete the “Uber” app from their phones.

Alhough Travis Kalanick issued a statement on Saturday speaking against the Trump immigration order, angry Twitter users accused Uber of profiting from the strike and giving priority to business interests. (Source: Ibid.)

This kind of public sentiment is not good for the Uber IPO, and this has increased the problems for Uber stock’s future. The company has experienced negative publicity earlier, on account of surge pricing, which is the practice of raising fares when demand is high.

In contrast, Uber rival Lyft was praised by social media over its clear and timely response to the Trump immigration order. Lyft co-founders issued a statement titled “Defending Our Values” and pledged $1.0 million to the American Civil Liberties Union (ACLU). (Source: “Defending Our Values,” Lyft, January 29, 2017.)

As investors look forward to equity offerings from technology players like Uber, Airbnb, Inc., and Snap Inc. in the year 2017, uncertainties surrounding the policies of the Trump administration are casting a shadow over the technology sector. Expectations are high from Uber stock’s offering, and any negative news at this time may not be good for the company.

Travis Kalanick, along with other technology chiefs, are scheduled to attend Trump’s first business advisory panel meeting on Friday. Kalanick has stated that he would discuss issues related to the ban. Although the Travis Kalanick-Trump face-off may not impact the Uber IPO and Uber stock, the public backlash against the company is a serious issue.

Moreover, there are certain financial challenges that could make the Uber IPO face certain headwinds this year. Although the ride-hailing service has clocked in impressive growth, it still loses money. Uber lost about $2.8 billion last year, according to the technology news web site, The Information. Expansion in countries like India is turning out to be costly. (Source: “Uber may encounter rough IPO ride,” Reuters, December 20, 2016.)

For a company that is so closely intertwined with the lives of its customers, Uber needs to tread cautiously in the Trump era. The values that drive Uber as a company and the statements made by Travis Kalanick on sensitive issues, now that he is a part of Trump’s advisory panel, are likely to impact the success of the Uber IPO and the future of Uber stock.