Uber ended its first day of trading lower, but that’s because investors aren’t fully appreciating what the company can do, former Uber exec Emil Michael told CNBC on Friday.
The highly anticipated debut fell flat after the ride-sharing company dropped 7.6% to $41.57 on Friday. It began trading at $42 per share after pricing its IPO at $45 Thursday night.
“What they are missing is the autonomous technology division, which was just valued at $7.5 billion two weeks ago with a $1 billion cash infusion, [and] the equity stakes it has in the other ride-sharing companies around the world,” Michael said on “Closing Bell.”
“As that comes out, I think you’ll see some recovery.”
Michael, who served as Uber’s senior vice president of business, left the company in 2017 amid the scandals that also led to CEO Travis Kalanick’s resignation. Michael is still a shareholder in the company.
“I take blame and apologize for things I do wrong,” he said. “But also, more than anything, I’m more proud of what we built.”
Uber’s ride-hailing service is its core business, reaching into 63 countries and more than 700 cities. However, the San Francisco-based company has also diversified into bike and scooter rentals, food delivery and freight. Uber is also developing air taxis and driverless car technology, among other things.
As for how investors should judge the company come earnings time, Michael said they should be patient. Uber Eats, for one, “has a long way to go” when it comes to growth.
“If you judge it by cash flow too soon, I think that will be doing a disservice to the potential of that business,” Michael said. “That business has the potential to be as big as ride sharing is and right now it’s only a fraction of what that is.”
He also disagrees with those who think Uber should have gone public sooner. He argues the business had to mature a little first.
“When a company is in a growth phase and was as ambitious as we are and were, you want to be able to do that without the quarterly heartbeat of, ‘is every Wall street analyst and investor going to question every judgment you make’ because … you are experimenting with new business models, in new regions.”
— CNBC’s Lauren Feiner and Leslie Picker contributed to this report.