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Uber Proposals Value It at $120B in Possible 2019 IPO
- yfares 8y agoMost relevant info here has to be how banks are thinking about the current market and climate of IPOs. Seems like the view is that market conditions haven't really changed, even with recent market jitters. Will be interesting to see how this perception holds through to the actual IPO date next year.
- iaw 8y agoI'm amazed because it implies positive free cash flow in the billions which, last I heard, Uber did not have. Barring some major turn around, or increase in competitive advantage, my guess would be that there are a lot of people that want to get their money out before the whole thing implodes.
- GreeniFi 8y agoThere seems to have been a general uptick in mainstream media warnings of a recession recently. For example the Economist cover last week: “how bad will the next recession be”. I’m not an expert I hasten to add, but before 2008 I also noticed this slow ratcheting up of the focus ahead of the final blow-up. I realise this could be a very biased viewpoint, it’s only a datapoint, but it makes me wonder, if you could track google search terms related to recession over time or appearances in the press, would this be a predictor of actual sentiment and impending recession? I also wonder if there is a generalized impending sense of doom and investors feeling like they need to exit ahead of a crash.
- GreeniFi 8y agoI just checked google trends, and a very superficial look suggests an upwards trend line over the last 5 years. https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=Recession https://trends.google.com/trends/explore?date=today%205-y&ge...
- docker_up 8y agoMainstream media has never accurately predicted a crash. In fact, the news articles are great indicators that things will keep going up for at least a year or two.
- panda427 8y agoThey have been potentially "IPO"ing for 4 years. Until they announce it formally I don't believe any reports.
- hammeiam 8y agoWhat? TK was very vocally opposed to IPOing while he was CEO. Uber has publicly stated that it is targeting 2019 for an IPO, and in fact that was a condition as part of Softbank's recent investment. https://www.investopedia.com/news/uber-will-ipo-2019/ https://www.investopedia.com/news/uber-will-ipo-2019/
- aetherson 8y agoThis would be a kind-of-astoundingly-to-me positive valuation for Uber. If they can get it, they'll have proved a lot of the haters (like me) wrong over the last few years.
- AnimalMuppet 8y agoNo, that won't prove the haters wrong. It will prove the haters wrong if Uber can not only IPO but not crater thereafter.
- aetherson 8y agoI mean. If they briefly touch $120B at 10am on their opening day and then sanity prevails and they close trading at $20B, sure, I reserve the right to crow about how I was an Uber skeptic before Uber skepticism was cool. But if they spend a few weeks at $120B and then cool off to $90B, or even $60B, then I should and will eat that crow.
- calyth2018 8y agoWhy should you eat crow? Opening weeks of an IPO is usually a frenzy until rationality returns, no?
- praneshp 8y agoBecause aetherson's definition of sanity is 20B. If the stock is 60b after 6 months, then crow eating is not totally unfair.
- Zephyr314 8y agoGeneral employee lockup [1] ends at 6 months usually. A tank right before/at that time could signal what the insiders think and the long term prospects in general. [1]: https://www.investopedia.com/ask/answer/12/ipo-lockup-period.asp https://www.investopedia.com/ask/answer/12/ipo-lockup-period...
- philipodonnell 8y agoThese proposals are just advertising for the firms trying to win the IPO deal as they try to one-up each other to predict the largest valuations. It's basically meaningless.
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- ProfessorLayton 8y agoIf I understand IPOs correctly, I don't think that's true. Underwriting firms are left holding the bag if they overprice a stock, so it is not in their interest to overvalue it during an IPO. Further, if the price is too high, they'll cool down enthusiasm for the stock, and depress the price.
- huac 8y agothis is just a proposal, the firms can walk the number down later, it's in their favor to put up a high number so that they get free advertising (like this) and a better chance at winning the IPO mandate
- iaw 8y agoIn theory that's how it should work if there was internal firewalls. In reality the brokers at the investment banks will shill the IPO to their undesirable clients as a way to get it off the books, or at least that's what they usually do.
- Lazare 8y agoI think you understand IPOs correctly, but you missed the bit where this isn't an IPO. This is the bit where some firms say "hey, at some point in the future you should totally sell yourself through us, we think you're very likely totally probably worth a zillion dollars". And then at some point in the future Uber will actually do an IPO with one of these banks, and the underwriters will price the stock at whatever level they're confident they can clear the shares, and it will be a lot less than $120 billion, and Uber will say "what happened, you said you thought we were worth a zillion dollars!", and the banks will cough and shuffle their feet, and tell some white lies, and blame the economic cycles and sunspots and the lack of vision of the institutional investors who bought the bulk of the shares. But the reality is, nobody thinks Uber is worth $120B, and nobody (least of all Uber) should take the headline as suggesting that someone does. The $120B number is meaningless, it's just flattery to try and convince Uber to go with them for the IPO, where actual numbers will have to be pulled out of a hat.
- justfor1comment 8y agoYes, they have a big user base but the biggest concern for me as an investor would be can they increase prices without losing users. I believe Uber customers are very price sensitive and on top of that the self driving division was shut down so their costs won't go lower any time soon. So how will this business generate billions of dollars in profit?
- sandworm101 8y ago>> So how will this business generate billions of dollars in profit? It doesn't. At least, not from people paying for rides. I suspect Uber will have to start leveraging their passengers. Either they are going to start hitting them with ads, as taxis have done for years, or become yet another source of consumer data. I imagine a possible nightmare scenario whereby Uber starts charging people other than passengers. Venues such as nightclubs could be asked to contribute else their customer base not get rides home.
- mikeyouse 8y agoI saw a troubling portrayal of Uber's value the other day that had very little to do with people paying for rides. The gist was, Uber has fine-level logistical detail on millions of business people including where they live, work, eat, drink, take meetings -- Often tied to corporate email addresses. So what's the value of knowing that some SVP at Google is taking several meetings at some company? Or which of Amazon's HQ2 team are traveling out of which airports to city halls across the country? I'm sure there's marketing value to knowing that a random 30-something likes to get burritos on the way home from the bar, but there's a ton of really valuable info buried in ride histories.
- calyth2018 8y agoThat could happen, but then I'd imagine they'd be sued out of existence.
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- olivermarks 8y agoSoftbank just took a huge stake in Uber at beginning of 2018 The valuation numbers have yoyo'd up to 120billion despite '....The deal includes a large purchase of shares from existing Uber investors and employees at a discounted valuation for the company of $48 billion, a 30 percent drop from Uber’s most recent valuation of $68 billion. These secondary stock sales will be completed by the end of the day Thursday on the Nasdaq Private Market, an Uber spokesman said'. https://www.reuters.com/article/us-uber-softbank-tender/softbank-is-now-ubers-largest-shareholder-as-deal-closes-idUSKBN1F72WL https://www.reuters.com/article/us-uber-softbank-tender/soft... We've gone from a damaged company worth 48b in January to a 120b valuation in a few months. Presumably the Saudi and Japanese softbank investors are hoping to extract an ipo profit.
- NTDF9 8y ago> Presumably the Saudi and Japanese softbank investors are hoping to extract an ipo profit. Greater fool theory?
- Fricken 8y agoNot all the money in Uber is dumb. Early investors like Benchmark and GV had an exit opportunity when the Softbank deal was being negotiated, but none of them took it.
- mbreese 8y agoBut the early investors are less sensitive to the higher valuation volitity. I doubt GV really cares if the valuation is 59B or 100B. They were in early enough, that I suspect they’ll make a heavy profit regardless. It would be interesting to know if the final IPO values higher or lower than what SoftBank would have been offering, but even if Uber ends up lower, I’m sure there is relatively low risk to early investors. I’d love to know the actual numbers though.
- acchow 8y ago> I doubt GV really cares if the valuation is 59B or 100B There is no VC that doesn't care about a 70% difference in returns.
- whatok 8y agoLyft also announced IPO plans on a similar timeline shortly after and Postmates just did too.
- marnett 8y agoseems oddly convenient given all the free money drying up from fed rate hikes
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- ccwilson10 8y agoIt'll be interesting to see how the new "ride sharing" economy of scooters and bikes impacts their bottom line. The scooters are very popular in SF so far and Uber recently launched in Santa Monica. Seems like a more scalable way to get into cities and not rely on a driver infrastructure. Anyone have any idea of the ROI of a scooter so far?
- dsnuh 8y agoThe scooters and bikes are a complete nuisance in my city. The companies littered almost every intersection with 4-8 scooters. I don't see the bikes as much anymore, other than stolen ones that every homeless person seems to have now. I have seen a total of 3 people riding the scooters ever. They are often tipped over into the sidewalk or into the bike lane or roadway. You can go into certain parts of town and it literally looks like all sidewalk space has been surrended to parking lots for these bikes and scooters.
- southphillyman 8y agoThis was my impression when I went to Santa Monica/Venice last December and I had to step over an unused Bird scooter every 3rd step. But recently I was in Atlanta and they are hugely popular there. Everyone from little kids to office workers with helmets on were using them. I wish they were in my city, seems like an awesome way to travel <10 blocks. I'll be going to LA and Atlanta both fairly soon and will def give the scooters a try.
- bllguo 8y agoehh last december might have been too early, to be fair. These days I see people using the scooters almost every time I go outside
- anonymous5133 8y agoEven in places like Santa Monica where you have the rich people complaining about nuisance they will still be popular because they're a reliable form of green transportation.
- RIMR 8y agoSplit between drivers, this is $750,000/driver. I get that Uber has a massive footprint, but given that they've never turned a profit in their entire company history, I don't understand how they can be worth this much...
- anonymous5133 8y agoIt is all about growth is why.
- brianwawok 8y agoThat's true of a product company. But if your product is an app for taxi drivers to use... it's not a 750k per employee product. Perhaps if they had self driving taxis....
- aeternus 8y agoThey are profitable in many cities, they basically just reinvest 100% of profits in geographic expansion. Amazon did the same thing, and investors said the same thing, and look how that turned out.
- Sohcahtoa82 8y agoIs there a term for costs that are purely associated with growth and not regular operations? For example, research and development on new products/features, expansion of manufacturing capabilities, building new offices, etc.? I frequently see people talk about X corporation not being profitable, but the claim is often extremely short-sighted as they ignore money being spent on growth and development. Ever dollar kept as "profit" is money not being spent on growth, which is huge when your company is still growing.
- jannyfer 8y ago“Capital costs” are probably what you are looking for.
- 8y ago
- krn 8y agoThe problem with Uber is, that it's only really successful in North America. It's heavily restricted in almost entire Europe[1], and lags behind many regional providers, such as Taxify, where it's not. Uber's only real international win is huge stakes in Didi Chuxing, Grab, and Yandex Taxi. But it's not like the entire world is using Uber, or ever will. [1] https://www.washingtonpost.com/news/worldviews/wp/2017/11/10/with-new-court-loss-in-britain-europe-becomes-more-of-a-minefield-for-uber/ https://www.washingtonpost.com/news/worldviews/wp/2017/11/10... (see the map)
- aquadrop 8y agoOfftopic, but that's one of the worst ways to do map legends I've seen. It reads like this: - Pink: restricted - Red: banned - Dark blue: Iceland
- JumpCrisscross 8y ago> The problem with Uber is, that it's only really successful in North America Uber could easily justify a $120 billion valuation by dominating American urban car transport. The big question is whether they'll be able to (a) dominate while (b) staying profitable.
- krn 8y agoWhat competitive advantage does Uber have over other companies? At least in my country, ride hailing companies are treated like taxis, and people switch instantly to the one that offers a better deal in town.
- JumpCrisscross 8y ago> What competitive advantage does Uber have over other companies? Local network effects. Kalanick's strategic mistake was assuming network effects in New York create network effects in Hanoi. They don't, apart from cash. But in New York, there are more drivers on Uber than other services. Which brings more riders. Which brings more drivers. Et cetera.
- 8y ago
- nameisu 8y agoalways making a loss. lets loot retailers
- elvirs 8y agoas an occasional uber driver and sometimes passenger I have to say while it has its moments when Uber is most convenient and cheap option there is nothing super amazing about this company or their product. Drivers are unhappy about worsening pay (uber keeps bigger cuts), riders are unhappy about worsening qualify of cars/drivers while uber still has not reached profitability. I would not bet the house on ubers ipo. may as well go the Groupon route
- jamesrom 8y agoThey are lying to you. https://news.ycombinator.com/item?id=12657116 https://news.ycombinator.com/item?id=12657116
- dbuder 8y agoRetail is going to get hammered yet again.
- sandeeps_ 8y agohow much money will a software engineer at Uber make, if this IPO goes through?
- tim333 8y ago$120bn eh? Their recent results were: > adjusted losses before interest, tax, depreciation and amortisation of $404m for the three months to the end of June > revenue ticking up 8pc quarter-on-quarter to $2.7bn There would have to be quite an improvement to justify that. I guess if revenue went 20bn/yr and they made $5bn on that it might look ok. Seems the bull case is they use their position to dominate taxis, delivery, logistics and similar https://www.quora.com/What-justifies-Uber%E2%80%99s-70B-valuation https://www.quora.com/What-justifies-Uber%E2%80%99s-70B-valu... On the downside Waymo seems ahead on the self driving thing with actual driverless taxis supposed to be rolling around Phoenix shortly https://arstechnica.com/cars/2018/10/waymo-wont-have-to-prove-its-driverless-taxis-are-safe-before-2018-launch/ https://arstechnica.com/cars/2018/10/waymo-wont-have-to-prov...
- ksec 8y ago>On the downside Waymo seems ahead on the self driving Once that Driverless Taxi Start real world testing and Waymo gets more Data, it will likely grow at a rate Uber can never catch up.
- paulie_a 8y agoMaybe post ipo they can fix their basic navigation features. If you book a ride and it says northeast corner it will always be Southwest corner. Drivers admit this and barely use Ubers navigation. They use Google maps.
- eip 8y ago18 year cycle confirmed.