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This is such an obvious ploy, it probably has the opposite of the desired effect. Uber would've been better served saying Lyft is worth less than their cash on
by erdevs 10y ago
This is such an obvious ploy, it probably has the opposite of the desired effect. Uber would've been better served saying Lyft is worth less than their cash on hand because of burnrate / runway and fierce competition. By establishing a $2B floor in what is clearly a ploy, Uber is actually communicating that they obviously think Lyft is worth far more than $2B. They just helped establish an anchor of more like $6-8B. If you are Lyft or Qatalyst, this is an exceptionally easy case to make.
The only way this is smart is if they're hoping to help pump up Lyft's price as a comp for themselves, or if they hope to drain a buyer of cash/assets by overpaying for Lyft and thereby lessening their competitive resources under that buyer. Both are stretches and silly bets, though.
- mkolodny 10y agoI think you're over thinking this. Suggesting that Lyft is worth a low price so that people think that means Lyft is worth more doesn't seem plausible. Why not just suggest that Lyft is worth $8 billion? On the other hand, I could see Uber trying to devalue Lyft so that they could buy them for cheaper. Or so that Lyft has a hard time raising money at a higher valuation.
- leereeves 10y agoWould regulators allow Uber to buy Lyft?
- sdenton4 10y agoSince when does uber care about regulations?
- billmalarky 10y agoFrom the article regarding Uber purchasing Lyft: "Uber Chief Executive Officer Travis Kalanick has said privately that he would not support such a deal because he believes it would face intense regulatory scrutiny"
- user5994461 10y agoI don't see why not. There are other [minor] competitors in the world.
- erdevs 10y agoI'm saying that if Uber was trying to devalue Lyft, it's far too obvious a ploy. It won't work. They may as well have said Lyft is worthless-- it'd still be for obvious reasons, but at least that wouldn't have established such a high floor. Any buyer reading this will assume that this means Uber thinks Lyft is actually worth upwards of $6-8B. As such, it is silly of Uber to have signaled this, unless they have a third-order effect they are hoping for (eg getting someone to overpay for Lyft). But I agree with you that that is unlikely to work... therefore, Uber is being silly here.
- caseysoftware 10y agoLyft claims their cash on hand is around 1.4B so Uber just said the business (tech, staff, brand, and infrastructure) itself is about $600M or about 1% of its own valuation. I'd say that's pretty devastating.
- erdevs 10y agoIf your direct competitor told the press your company was worth $5... do you think that would mean it's really worth $5? Do you think they'd really believe that it's worth just $5, or do you think they might have an ulterior motive? Do you think a prospective investor or buyer would believe what your competitor said, if that investor/buyer was savvy with respect to competitive dynamics in the slightest?