Time to Repeal the Rule That Aided Uber’s IPO Flop
The expanded limit on private investors could be weakening confidence in the public markets.
Mom and pop can’t help feeling disappointed and left out.
Photographer: Spencer Platt/Getty Images
It’s clear now that Uber Technologies Inc.’s initial public offering will be left with a less than five-star review. The stock remains below its IPO price, and many people have heaped fault on the bankers who told executives that Uber could be worth $120 billion. Nonetheless, according to a Bloomberg News article, Michael Grimes, Morgan Stanley’s top Silicon Valley banker who led the deal, isn’t experiencing a drop-off in demand for his services.
That could be because the real hazard that set the Uber IPO on a crash course — long before Grimes began moonlighting as a driver to win the company’s business — is a little-talked-about seven-year-old rule change that more than quadrupled the effective limit on the number of investors a company can have before its IPO. Given Uber’s weak start, and the potential for others, it’s time for lawmakers and regulators to revisit that change.