Early Uber Technologies Inc (NYSE: UBER) investor and Tusk Ventures CEO Bradley Tusk said on CNBC Wednesday he will be selling some of his shares in the ride-hailing company as the IPO lockup period comes to an end.
What He Said
Tusk identified two fundamental problems and sources of concern for Uber investors like himself.
First, management hasn't properly communicated its vision on why investors should stick with the company for the long term. Second, although not specific to just Uber, there is a "fundamental misalignment" between the private market and public market.
Uber has the potential to be a great company but "maybe not" worth $40 billion, Tusk said. The public market dictates valuation which implies investors could decide on a more appropriate valuation is $20 billion.
Why It's Important
Investors also look at Uber's business and demand the company operate multiple non-core businesses, like food delivery, autonomous driving and freight. If the company solely focuses on ride-hailing it would then live in a "world with a much lower market cap."
As an early investor Tusk's stake in Uber is "not at all" under water, he said. Nevertheless, he plans on selling some shares in the public market after already selling two-thirds of his position to Softbank 20 months ago.
"I thought I was selling at a discount, turns out I was selling at a premium," he said.
A lot of Uber employees will be looking to sell their shares in the open market, especially those who have been with the company since 2009 or 2010, Tusk said. These employees have been "rich on paper" for a decade and have been waiting for Wednesday's lockup expiration period for quite some time.
Uber traded down 4% to $26.90 per share at time of publication.