Uber co-founder Travis Kalanick has sold off more than $2.5 billion of his remaining stock in the company he established in 2009. He was the company’s chief executive until 2017 when he resigned in the wake of criticism that he had failed to address accusations of sexual misconduct and other examples of unethical conduct within Uber. However, he remained as a member of the board.
It now looks as though Mr Kalanick is on the verge of completely disposing of his equity stake in Uber. Since the company went public through an IPO in May, the company’s co-founder has sold off 90% of his remaining stake. All of the shares have been sold over the past 2 months, after the post-IPO lock-up period expired. If the sale continues at its current pace, the remaining stock Mr Kalanick still owns will have been cashed in by the end of the current year.
That would then call into question the viability of him continuing to hold a seat on Uber’s board. All of the company’s current directors face a shareholder vote in May, which will decide if they will be re-elected or not. As it stands, it is not even clear if Mr Kalanick has any desire to put himself up for re-election.
Mr Kalanick is busy with a new start-up – City Storage Systems. The company’s better known brand is CloudKitchens and is focused on building a network of real estate which will be leased to online-only restaurant and take-away brands. The rise of food order and delivery apps like Uber’s own Uber Eats unit, Deliveroo and Doordash has seen the appearance of ‘phantom kitchens’, that exist purely to serve delivery orders.
Until now, CloudKitchens has been largely self-financed by Mr Kalanick. The funds are believed to come from the $1.4 billion of Uber shares he sold to SoftBank in a private placement in early 2018. Mr Kalanick now has another $2.5 billion to inject into his new venture, should he choose to. The company already owns properties across Europe, the Middle East and Asia, as well as the USA.
At the time of Uber’s IPO, Mr Kalanick still owned around 6% of Uber. That’s dropped to a stake worth around $250 million – less than 0.5% of the company. The pace at which Mr Kalanick has sold his stock following the expiry of the lock-up period does not indicate he has confidence that Uber’s share price will turn around. The company’s value is around a third less than its IPO valued it.
Meziane Lasfer, professor of finance at City University’s Cass Business School, commented:
“When insiders, current and past, sell, they normally signal bad news. The market is likely to follow him.”