Sometimes, a broken initial public offering (IPO) can fix itself. Shares of Uber Technologies (NYSE:UBER) broke above $45 on Wednesday afternoon. The world’s top ridesharing service cracking a certain price point may not seem like such a big deal, but this is actually Uber’s IPO price — and this is the first time ever that the stock has traded above that mark.
Uber shares did trade as high as $45 on its first day of trading nearly four weeks ago, and it’s been meandering below that mark until now. The trigger for the rally is as silly as it’s obvious in retrospect: Many of the more than two dozen underwriters that helped take Uber public last month initiated coverage of the stock with…
bullish ratings on Tuesday.
It’s not a surprise. Everyone knew that the quiet period was ending earlier this week, and with the stock trading below $45, the consensus among the firms was going to be bullish. These firms had sold more than $8 billion of Uber stock at $45 to its prime accounts. The underwriters would be in hot water if they didn’t stand by the stock as a buying opportunity below the IPO price. Everyone knew that the bullish initiations were coming, but investors still ate it up.
Shifting into drive
The deluge of buy reports isn’t the only non-surprise to surprise the market. Wednesday’s climb makes it four trading days in a row of gains, and the catalyst there was its first-quarter results that were posted late last week.
Uber landed at or near the high end of all of the tight ranges it provided in its prospectus in its first financial report as a public company. This wasn’t a shocker. Uber’s updated prospectus was filed several weeks after the first quarter came to a close. Of course Uber knew how well it did and would put out guidance that would make sure it landed near the high-end of its forecast…
Continue reading at THE MOTLEY FOOL