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Uber prices blockbuster IPO conservatively to raise $8.1B
- iandanforth 7y agoIf you're planning on buying Uber stock can you walk me through your reasoning?
- alfalfasprout 7y agoWhat's the future? There's no guarantee autonomous vehicles will work at scale well in the next 10 years. Even if they do, ATG is behind its competitors and losing talent. The rest of their business except uber eats is bleeding money... and Uber eats is only sustainable if they keep human drivers that can actually pick up/hand off orders.
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- draw_down 7y agoGreater fool theory can work regardless of whether you believe in the business.
- panarky 7y agoHow big is the worldwide market for 1) personal transportation, 2) package and parcel delivery, and 3) 30-minute delivery of prepared foods, groceries, pharmaceuticals, auto parts, etc.? Can Uber capture 10% of that combined market opportunity with the efficiencies that come from globally optimized routing of all those trips? Can Uber inside-out the company so others can execute on its platform, with Uber taking a cut? If so, then an $80 billion present value seems low.
- shereadsthenews 7y agoCongratulations you have just committed the elementary Chinese Soda fallacy.
- parhamn 7y agoWhile I knew what you were implying, I wanted to see if this was actually a common term. It isn't but it did lead me to another HN comment [1] and this Fast Company article referring to is as "Chinese Math" [2]. Just an FYI for anyone else because this sort of "1% of x market" thing comes a lot and a term is helpful to speed up the convos. [1] https://news.ycombinator.com/item?id=10735610 https://news.ycombinator.com/item?id=10735610 [2] https://www.fastcompany.com/1710460/chinese-math-or-1-mistake-cripples-100-entrepreneurs https://www.fastcompany.com/1710460/chinese-math-or-1-mistak...
- ghaff 7y agoI consulted for someone once to do some market sizing among other things. They were determined to make a case around winning 10% or whatever for the worldwide market for X.
- SilasX 7y agoI didn't know the term for it [1], but yes, I had long since started checking out whenever someone starts to appeal to "if we can just get n% of <huge market>". [1] Even "Chinese Soda" has not entered common usage enough to justify calling it "the" or "a standard" term for it.
- panarky 7y agoThe "Chinese math" fallacy is only fallacious when it hides how difficult it is to steal a small percentage of a giant established market. How exactly does the "fallacy" apply to Uber, a company that thoroughly understands how difficult it is to carve a big chunk out of entrenched competitors? Since they've already demonstrated the ability to steal a sizable percentage of the taxi and car rental markets, it's good for Uber that they didn't listen to all the smart guys on HN.
- WDCDev 7y agoI am not buying stock, but a business model that could work is renting out a percentage of their capacity to companies/startups that need to deliver goods or services to customers' homes. I also don't believe self-driving will be anything more than tech stuck in R&D for the next 10 years. If I were an investor have preferred Uber sell ATG before this IPO.
- jmharvey 7y agoI own broad index funds. I expect that at some point, Uber will be added to the index that the funds track, so the funds will buy Uber. The basic reasoning here just boils down to market consensus that Uber is worth $x billion, and I don't really have any reason to think that I can outguess the market consensus.
- dpandya 7y agoOn the flipside: if you're a person that's convinced Uber should be valued at a fraction of what it is and you're not shorting it, why aren't you? You might argue the market will remain irrational, but this is unlikely to be the case for 25+ years. This should mean that most people set against the Uber IPO should hold a short position with at least a small portion of their net worth. Doesn't seem like this is the case.
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- YjSe2GMQ 7y agoYou can't easily short Uber yet, it is not traded yet. You'd need to find a) a current stockholder that will borrow you shares, and b) a new potential stockholder to buy it from you. And even after it starts trading it'll take a few days for options and shorts to become available. Tip: if you want to short via options (when options trading becomes available) wait a few hours to let the market makers settle their positions. Source: I've shorted BYND and paid a higher than necessary options premium because I was impatient.
- b_tterc_p 7y agoBearish because an upcoming recession seems likely to have three effects 1) make money more expensive and harder to justify subsidizing rides 2) increase the supply of drivers. 3) decrease the demand Less demand, more supply, but possibly higher overall prices due to subsidy withdrawal feels like a dangerous thing On top of that regulatory pressure to treat drivers as employees could decimate Uber at any moment. Not shorting because gambling on the stock market is not worth the effort. God could declare the true present value of a company’s future cash flows to be $10/share and I still wouldn’t count on the market to get it right- among other bothers.
- 6gvONxR4sf7o 7y agoWall street is crazy to me. They're losing out on a ton of money to avoid articles about "OMG the price isn't higher than last quarter!"
- plouffy 7y agoI recommend you read https://www.bloomberg.com/opinion/articles/2019-05-09/the-uber-ipo-day-is-finally-here https://www.bloomberg.com/opinion/articles/2019-05-09/the-ub... to get a better idea what is actually going on. Nothing crazy.
- tc313 7y agoI still think it’s pretty crazy to price an IPO below the highest price that you can get for the full allotment. Facebook’s stock plunged in the months following its IPO, but it can raise capital at a much higher price now. The stock price shouldn’t matter in the short run.
- jcfrei 7y agoThe fact that this is the most money losing company ever to IPO should raise some eyebrows.
- celticninja 7y agoEarly investors need to recoup something, so thats going to come from retail investors and pension schemes. When the share price halves in 12-24 months time the early investors and founders will be so rich they wont care.
- asdf21 7y agoI will be shorting this stock. It's obvious to me that Tesla will be eating Uber's lunch when it comes to Autonomous driving. In fact, I believe this entire IPO is just a way for investors to try to minimize and spread out the losses they know they will incur from Uber going under.
- fullshark 7y agoNothing is obvious when it comes to how autonomous vehicles will shake out.
- DevX101 7y agoThat autonomous driving is coming is inevitable. The scale and timing I can debate though.
- Tiktaalik 7y agoA moon base must have seemed inevitable to those in the 1960s too.
- xmprt 7y ago1960s is a bit too optimistic. I personally think it'll happen in the 1970s.
- DevX101 7y agoIf building a base on the moon created wealth and would have rewarded the builders with billions of dollars, then yes, we'd probably have a base on the moon by now.
- bduerst 7y agoNot much money in moon bases. Transportation industry is over half a trillion $ though.
- Fricken 7y agoChris Urmson, co-founder of Aurora and former cto if the Google self driving car project doesn't expect to see autonomous vehicles such as robotaxis scale broadly for 30-50 years. His time frames were a fair but more aggressive a few years ago before he had hit self-driving car puberty. Autopilot's true believers have yet to recognize the full scope of the problem.
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- patfla 7y agoI'd curious to see an explanation of just how the ride-sharing business might be profitable. I assume this: "Uber’s chief executive, Dara Khosrowshahi, argued that Uber’s future was not as a ride-hailing company, but as a wide technology platform shaping logistics and transportation." implies that Uber hasn't figured it out.
- ghaff 7y agoNot clear to me it’s more complicated than raising prices. But that probably implies operating in fewer markets and lower volume. You’re a taxi with better dispatching at that point.
- SilasX 7y ago"Can you give us $8 billion for 10% of this venture so we can, you know, figure out a way to make money?"
- DamnYuppie 7y agoThis is was done for quite awhile for Amazon.
- warp_factor 7y agoI'm tired of this fallacy. Amazon was losing money only because it was expanding. They could have stopped expanding and they would have made money instantly. Uber on the other hand is losing money because they are actively competing. They cannot be in business without losing that money, that's where it's scary
- patfla 7y agoPart of the way I remember the early Amazon is they were bootstrapped by the fact that web purchases were, for a time, exempted from state sales taxes. Some of that history here it would seem: https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States#Internet_transactions https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat...
- raz32dust 7y agoI am not planning to buy, but if I would consider, my reasons would be specifically to not bet on self driving cars. I don't foresee self-driving cars to be ubiquitous in the very near future (5 years). Until then, Uber's presence and driver network can ensure that they are profitable in current markets. They already are in major cities.
- brianwawok 7y agoDon’t they spend a lot more on self driving than say lyft? I think a bet on Uber is a bet they win self driving. A bet on taxi apps is a bet on lyft.
- pen2l 7y agoBut hasn't Google invested a couple billion on Lyft? And since Google is the leader in self-driving, might not Google help Lyft in its self-driving endeavors -- therefore making Lyft more able to pull-off a fleet of self-driving taxis?
- gamblor956 7y agoSelf-driving cars are more expensive than a human-driven fleet. Lyft would need to own (or lease) the vehicles themselves, and pay all the associated maintenance costs. Their current business model is entirely predicated on not paying those costs, and nothing about self-driving will provide the necessary margins for the economics of a self-driving fleet to pan out.
- djakjxnanjak 7y agoOwning a fleet is mostly a problem when they are laying around depreciating without being used. Higher capacity factor of self-driving cars will make the economics a lot better. The main issue would be if one player owns the self-driving IP they can capture that surplus. So investing to develop that IP is an good opportunity.
- brianwawok 7y ago
- powera 7y agoThis whole thing is a load of spin. If they could have gotten a higher price, they would. Uber stock is going to be lower than this valuation in a month's time, mark my words.
- sonnyblarney 7y ago"If they could have gotten a higher price, they would" - this is very true. But consider with every price is risk. It may very well be that Uber wants to limit risk of some debacle and is taking a conservative approach, which is reasonable.
- mr_tristan 7y agoI'm only starting to hear that Uber intends to replace public transportation: > Our Personal Mobility TAM consists of 11.9 trillion miles per year, representing an estimated $5.7 trillion market opportunity in 175 countries. We include all passenger vehicle miles and all public transportation miles in all countries globally in our TAM, including those we have yet to enter, except for the 20 countries that we address through our ownership positions in our minority-owned affiliates, over which we have no operational control other than approval rights with respect to certain material corporate actions. We estimate that these 20 countries represent an additional estimated market opportunity of approximately $0.5 trillion. See "Our Market Opportunity" section in the S1 (https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm#toc647752_4 https://www.sec.gov/Archives/edgar/data/1543151/000119312519...) This seems quite ... optimistic to me. I'm not sure how many public transportation companies actually operate at a significant profit, such that they can undercut. It also seems risky, in that they might generate a huge backlash if they try to do the whole "we're just gonna loss lead until we're dominant, then jack up the price" strategy. I'm guessing there is section of the population that says "screw it, I'll rent a car" where public transportation is quite slow, but replacing public transportation for poorer people is just going to be losing money. Given that Uber is already losing money, I'm just wondering how you'd develop a model where this TAM makes sense.
- b_tterc_p 7y agoThere are many profitable subsections of public transit. The issue is the it’s a PUBLIC resource. They’re not run to maximize profit. They also run many lines which are not profitable. If a private company tried to steal the business of the profitable subsections it would put the non profitable ones at risk. Smart governments would outlaw such competition.
- notahacker 7y agoThey wouldn't even need to outlaw competition in most cases of profitable subsections of public transport, because a profitable commuter train into $busycity /= a potentially profitable service driving commuters in large numbers of small vehicles through heavy traffic to the same destination...