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Uber Stock Tumbles Nine Percent After Company Reported Billion-Dollar Quarterly Loss

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  • Alex Dovbnya
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    The shares of $UBER are getting hammered right on the verge of IPO lock-up expiration

Uber Stock Tumbles Nine Percent After Company Reported Billion-Dollar Quarterly Loss
Cover image via u.today

The shares of Uber (NYSE:UBER) continue to bleed after the ride-sharing behemoth reported more than $1 bln in quarterly losses. At press time, the company's stock is sitting at $28.23, down more than 30 percent from its IPO price.  

According to CNBC, Uber's loss in Q3 amounted to a whopping $1.16 bln. However, there is always a silver lining -- financial analysts predicted a $1.45 bln loss and better-than-expected revenues ($3.8 bln vs. estimated $3.4 bln).   

Like a lot of Silicon Valley unicorns, Uber remains unprofitable. Its path to profitability was seen as a huge question market ahead of the long-awaited IPO that took place back in May (the same applies to its competitor Lift who went public a tad earlier). However, CEO Dara Khosrowshahi is certain that Uber will be able to turn a profit in 2021.   

“We know there is the expectation of profitability, and we expect to deliver for 2021,” Khosrowshahi told CNBC.

There is a good chance that the aforementioned sell-off will continue given that Uber's stock lockup will expire on Nov. 6. That means that 97 percent of its shares outstanding during the long-anticipated IPO will become eligible for sale.

Notably, SoftBank, which is helmed by Japanese billionaire Masayoshi Son holds a whopping 15 percent stake in the company after winning a tender in 2017. 

The company's valuation has dropped below $50 bln (a far cry from $68 bln it was worth four years ago), which made it an underwhelming investment. It remains to be seen what SoftBank's next move will be.  

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with an extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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Federal Reserve System: Stablecoins Pose Potential Risks to Financial Stability

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  • Vladislav Sopov
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    According to its Financial Stability Report of November 2019, the Board of Governors has warned about the dangers of stablecoins.

Federal Reserve System: Stablecoins Pose Potential Risks to Financial Stability
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Contents

The Board of Governors of the U.S. Federal Reserve System have issued their monthly Financial Stability Report. This special report is dedicated to the profits and risks of "global stablecoins".

Stablecoins: Global System with So Many "Ifs"

First, the Federal Reserve admits to the numerous advantages that stablecoins present as a concept. It has been highlighed that stablecoins are "faster, cheaper, and more inclusive payments could complement existing payment systems". This is in comparison to cases where traditional financial institutions are sophisticated and poorly accessible. Stablecoins can also be managed to eliminate the volatility of cryptocurrencies, which is one of the borders for them to be utilized as the medium for exchange.

Therefore, the "global stablecoin initiatives" like Facebook's Libra can rapidly achieve cross-border adoption. However, the major threat for stablecoins is apparent - the "inability to convert in national currency". The loss of confidence in "pegging" the stablecoin to traditional assets can lead to a run, in which several holders will attempt to liquidate their stablecoins at the same time.

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This dramatic scenario may be caused by "poor design and governance", and can result in severe consequences for international economic activity, asset prices, and financial stability.

Transparency First

The Federal Reserve also outlined in its report that in many cases, stablecoins can be utilized for money laundering, terrorist financing, and other financial crimes. Therefore, the Federal Reserve would require operators of such systems to conduct their Due Diligence, as well as Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures to avoid any abuse. Moreover, the problems of disclosure policy and protecting investor data should be of paramount importance for stablecoin issuers:

Disclosures should clearly detail consumer and investor rights and protections, including whether the holder of the stablecoin has any rights to the underlying asset. Issuers should be transparent on how the stablecoin is tied to the underlying asset, has been said in the Report.

Last but not least, the report highlighted that the Federal Reserve, together with the Group of Seven, will closely monitor stablecoin developments as well as all the risks associated with it.

Have anyone ever invested in stablecoins? Do you prefer to use it, or to pay extra fees for fiat gateways? Tell us your story on Twitter!

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About the author

 Blockchain Analyst & Writer with scientific background. 5+ years in IT-analytics, 2+ years in blockhain. Worked in independent analysis (Crypto Briefing) as well as in start-ups (Swap.online, Monoreto, Attic Lab etc.)

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