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Uber set to price IPO – What to know in markets Thursday

The bar just got lower for Uber’s initial public offering, according to reports Wednesday.

The ride-hailing giant is set to price its long-anticipated IPO on Thursday, with shares on track to begin trading on the New York Stock Exchange on Friday.

As of Wednesday afternoon, Uber was on pace to price its IPO at or below the midpoint of its target range of between $44 and $50 per share, according to the Wall Street Journal. This band had already been lowered from a previously reported range of between $48 and $55 per share. A separate report from Bloomberg Tuesday had said that Uber had enough demand to price its IPO at the top of its targeted price range.

Assuming a $47-per-share IPO pricing, Uber’s fully-diluted valuation would be about $86 billion – down sharply from the as much as $120 billion valuation floated earlier this year.

A spokesperson for Uber did not immediately respond to Yahoo Finance’s request for comment.

Uber has reportedly pared down expectations for its IPO amid signals of a market less amiable to a new entrant — especially one with as high an implied valuation as Uber’s.

Namely, the company’s public stock offering comes on the heels of a sudden stock market drop this week and an underwhelming public debut by peer ride-hailing company Lyft. These factors have likely influenced Uber and its IPO underwriters to temper investor expectations heading into this latest public offering, some observers have speculated.

“We continue to view Lyft's stock performance and lack of disclosures going forward (bookings, take rates) as the 1-2 punch, which coupled with a choppy tech tape caused Uber to look at a more conservative price range based on its demand for its IPO, a prudent strategy in our opinion coming out of the box,” Wedbush analyst Dan Ives wrote in a note Wednesday.

An Uber sticker is displayed on a vehicle in the Time Square neighborhood of New York, U.S., on Wednesday, May 8, 2019. Photographer: Jeenah Moon/Bloomberg via Getty Image

Meanwhile, Uber and Lyft drivers across the country went on strike to protest both companies’ pay and labor practices, creating another “downdraft” impacting sentiment around Uber’s IPO, Santosh Rao, head of research at Manhattan Venture Partners, told Yahoo Finance Wednesday.

Lyft’s IPO has been viewed by many as a proxy for Uber’s performance, given the essential duopoly of the domestic ride-hailing market, with Uber at 67% of U.S. market share and Lyft at 33%, according to Edison Trends. By that measure, the former’s more than 26% stock decline from its IPO price has cast a dark shadow over the latter’s forthcoming offering.

However, many analysts have warned against conflating the two companies, especially given their differing business strategies.

“We continue to view Lyft as a one-trick pony domestic ride sharing player and ‘little brother’ to Uber, which has clearly established itself as the clear #1 player and in our opinion is paving a similar road to what Amazon did to transform retail/e-commerce and Facebook did for social media,” Ives said.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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