Uber founder liquidates $2.4bn worth of stock in two months

20 Dec 2019

Image: © NYCStock/Stock.adobe.com

Former Uber CEO Travis Kalanick began to sell his shares in the company after Uber’s post-IPO lock-up period ended on 6 November.

Uber co-founder and former CEO Travis Kalanick has cashed in another $383m of Uber stock, which means that he has now sold more than 90pc of his shareholding in less than two months, amounting to around $2.4bn in total.

Between 16 and 18 December, Kalanick sold nearly 12.8m shares, according to a Securities and Exchange Commission (SEC) filing.

Future Human

On 16 December alone, Kalanick sold 7.8m shares, the largest number sold since he cashed in 10m shares across two trades on 20 November. The co-founder now has 8.2m Uber shares remaining.

Kalanick departed Uber in June 2017, following controversy over the company’s culture, including allegations that he ignored reports of sexual harassment and discrimination in the company.

He is now CEO of CloudKitchens, a food delivery platform that runs ‘dark’ restaurants, with spaces to prepare food for delivery-only restaurants, cutting out many of the costs associated with running a regular restaurant or takeaway.

These dark kitchens are used by UberEats as well as its competitors DoorDash in the US and Deliveroo in the UK.

Selling shares since November

Kalanick began to sell his Uber shares after the company’s post-IPO lock-up period ended on 6 November. When early investors were allowed to offload stock on this date, the sales dragged Uber’s stock price to record lows.

According to the Financial Times, the scale and pace at which Kalanick has been offloading Uber shares is prompting speculation that he could sell his entire stake before the year is out, raising questions about his long-term position on the company’s board. Uber’s directors will face a shareholder vote for re-election in May.

The FT also suggested that Kalanick is selling the shares to increase the “war chest” he has to finance CloudKitchens, as the CEO has been purchasing real estate all over the world to lease to restaurants serving food delivery apps.

Could this signal the end?

Meziane Lasfer, professor of finance at City University’s Cass Business School, told the publication: “When insiders, current and past, sell, they normally signal bad news. The market is likely to follow him.”

With that said, it’s not uncommon for a founder to dump their shares after leaving a company, as was famously done by Steve Jobs when he was ousted from Apple’s board in the 1980s.

Forbes now estimates Kalanick’s worth to be around $2.7bn, down from his $3.5bn worth in early October on the Forbes 400 list, as the majority of his wealth now sits in assets that are not Uber shares.

Meanwhile, other Uber board members, such as CEO Dara Khosrowshahi and independent chair Ronald Sugar, have purchased more shares since November. Co-founder Garrett Camp has sold nearly $50m and has given away another 8m shares (currently worth $225m) to an unknown entity.

Uber stocks are currently trading at $30 each, which is well below its IPO price of $45 a share.

Kelly Earley was a journalist with Silicon Republic