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Uber Founder Dumps 56% of Stock in a Month, But He Can’t Be Sued

Last Updated September 23, 2020 1:20 PM
Mark Emem
Last Updated September 23, 2020 1:20 PM
  • Travis Kalanick has now disposed of more than 42 million Uber shares held directly.
  • The ride-hailing pioneer’s newest venture is in the food delivery sector.
  • CEO Dara Khosrowshahi has meanwhile been adding to his stake.

Since the 180-day lockup period expired, Uber co-founder and former CEO Travis Kalanick has sold the entire stake in the ride-hailing giant held indirectly. And now he is past the halfway mark disposing of the stake he holds directly, per a December 2nd SEC filing .

As of Monday, Kalanick had sold over 56% of his Uber stake. Initially, Kalanick held 75,653,808 shares of Uber directly but now only 33,154,909 shares remain. This has netted him over one billion dollars before taxes and other fees.

Kalanick now owns less than 34 million shares in Uber | Source: SEC

Kalanick, who still sits on Uber’s board first disposed of the entire stake he held indirectly between November 6th and 11th. During that period, Kalanick sold more than 20 million shares of Uber held under a charitable remainder unitrust (CRUT). With the lowest price being $26.65 this fetched at least over half a billion dollars.

Travis Kalanick
Uber co-founder’s indirect stake was the first to be disposed of last month | Source: SEC

Does Travis Kalanick know something other investors don’t?

Despite the heavy selling, Uber and Kalanick are immune from any liability. Per the SEC, Kalanick is selling under an existing Rule 10b5-1 plan . Under the rule, insiders do not have direct control of the transactions. Consequently, the rule provides insiders with the ability to buy or sell company securities without being accused of insider trading.

It is notable that since the lockup period expired, Travis Kalanick has been selling Uber shares on every single day that the market has been open. This has resulted in Kalanick’s stake now significantly lower than that held by his co-founder Garrett Camp. The latter now holds more than 72 million shares  of the ride-hailing giant. Before the expiry of the lock-up period, Kalanick held the larger stake.

Insiders buying as co-founder bails

Though Camp also disposed of a significant chunk, it wasn’t as aggressively as Kalanick. And while Kalanick has been selling on every single day that the market has been open, Camp last sold over a week ago.

Another difference is that Camp also waited a week after the lockup period expired before initiating the sale. Kalanick started selling at the earliest possible opportunity.

The ex-CEO’s aggressive selling contrasts sharply with the actions of the current Uber CEO and board chair. About two weeks ago, Uber CEO Dara Khosrowshahi acquired 250,000 shares of the ride-hailing firm. In the first week after the lockup expiry, board chair Ronald Sugar bought 35,000 shares.

Uber co-founder develops an appetite for ghost kitchens

While Kalanick has not publicly disclosed the reasons he is divesting from Uber so aggressively, other business interests could be the reason. Since he was ousted as the CEO from the on-demand transportation firm, he has embarked on new ventures that require massive financial resources. Some of these ventures also promise rapid growth at a faster rate than Uber could possibly offer. This comes at a time when the ride-hailing sector is coming under increasing regulatory pressure from around the world.

One of the ventures Kalanick has embarked upon is kitchen rental startup CloudKitchens. The startup buys cheap real estate in densely populated areas and hires them out to restaurants focused solely on preparing food meant for delivery.

CloudKitchens is already operating in the US, China, India  and parts of Europe. So far, Kalanick has personally invested $300 million in the startup.