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Here's a question: is there a kind of equilibrium that private companies like Uber can risk breaking in terms of ultimate public valuation by staying private fo

Here's a question: is there a kind of equilibrium that private companies like Uber can risk breaking in terms of ultimate public valuation by staying private for too long and taking too much investment pre-IPO? If would-be shareholders have seen Buffet type investors going in (or attempting to go in) with absolutely colossal cash injections pre-IPO, might it appear like too much of the explosive growth potential has already been squeezed out before the IPO? And therefore there is less incentive to buy the stock speculatively, making the stock price lower at IPO. Isn't this a bad thing for investors looking to get in late stage? Put another way, could Buffet's investment have actually risked its own likelihood of eventually paying off, due to its size?

alehul 8y ago
It could be the case, but quite unlikely. As Buffett is a value investor, there's a very simple set of rules he follows that I recall learning from a similar-minded portfolio manager: 1) set a price the company should be valued at 2) pay less than that price 3) don't be wrong So while Buffett's investment would be colossal and substantially raise the price of the company, all that investment says is that he thinks it is currently undervalued, and he likely isn't trying to throw enough money in Uber's direction to fix the entire pricing error, from a finance standpoint. There would actually likely be more damage caused if value investors publicly turned down investing in a pre-IPO company.