# Uber IPO



## sags (May 15, 2010)

How in the world is a company that has never earned a profit, has no assets, has no protective barrier to entry, has risk from drivers and regulations, worth $70 Billion dollars ?

Investors lost $655 million on the IPO which was supposed to open at $45.....was delayed and ended up opening at $42 and ended the day at $41.57.

The company got $8 billion in cash out of the deal and the founders were smiling from ear to ear..........but this is so reminiscent of past tech bubbles.


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## EPS_Investor (Sep 7, 2017)

Decades of people investing in non profitable businesses, how this still happens and people are gullible enough to buy a cash burn business like Uber and expect a positive ROI is beyond me. 

First rule I always use when buying a stock, DOES IT MAKE MONEY! If no, there's no reason to go further. I really do hate when people "forecast" a year, two, three that a company will be profitable. I don't care about 36 months from now, I might be dead by then. I want to know TODAY that the company makes money. If the company does make money, then you delve further into it.


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## l1quidfinance (Mar 17, 2017)

Mindblowing. Especially when the prospectus even states that they may never achieve profitability.


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## james4beach (Nov 15, 2012)

I would never buy this either, but also think of Amazon. They generally had negative net income in the 2013-2014 time frame, so they were not profitable. The stock is up about 600% since then, and the company shifted towards profit. AMZN is now 3.2% of the S&P 500 and one of the best large cap performers by far.

When AMZN first started becoming (mildly) profitable, their forward P/E was about 4,000. With conventional valuation, it would have been crazy to buy a stock with a P/E of 4000


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## doctrine (Sep 30, 2011)

Well, they do have $11B US in revenue and are the leader in the space. Similar to Twitter in a lot of other ways, including that they're losing money, but a recent commitment by the company to clamp down on spending has brought them into the green. If people have confidence that Uber can continue growing without going bankrupt then the stock may still do well.


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## kcowan (Jul 1, 2010)

james4beach said:


> When AMZN first started becoming (mildly) profitable, their forward P/E was about 4,000. With conventional valuation, it would have been crazy to buy a stock with a P/E of 4000


I used to do momentum stocks around 2004 and would have loved AMZN. And there is nothing wrong with that as long as you have a reputable broker who will alert you to any changes. Now I am a boring value investor and get no external advice.


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## jargey3000 (Jan 25, 2011)

ANYBODY buying a few shares now (around $37)...... just for 'fun'....?


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## Kabanga (May 15, 2019)

Uber's IPO fur sure was not good at all, but let's look at the positive side... I think it's not a secret that the stock will rise further in future, so I think better this way, we'd have a better price to buy it. BTW today Uber closed the gap (closing price is 41.22$) so is not it a perfect place to short until 28$ for example (just an example but I guess there we would fall probably). And than find a good spot to buy and hold, 63$ per share is not the limit by May 2020... thought?


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## MrMatt (Dec 21, 2011)

Kabanga said:


> Uber's IPO fur sure was not good at all, but let's look at the positive side... I think it's not a secret that the stock will rise further in future, so I think better this way, we'd have a better price to buy it. BTW today Uber closed the gap (closing price is 41.22$) so is not it a perfect place to short until 28$ for example (just an example but I guess there we would fall probably). And than find a good spot to buy and hold, 63$ per share is not the limit by May 2020... thought?


What is the competative advantage of Uber vs Lyft or other ride share/autonomous driving companies?

I don't see the billions in valuation.


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## sags (May 15, 2010)

I expect other ride share startups may infiltrate the most lucrative market areas, now that market analysis is available.


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## Beaver101 (Nov 14, 2011)

jargey3000 said:


> ANYBODY buying a few shares now (around $37)...... just for 'fun'....?


 ... I'll do it with Monopoly monies ... just for fun. :biggrin:


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## andrewf (Mar 1, 2010)

The unit economics are a problem. Selling $10 bills for $7 is an easy business to scale with sufficient capital, but hard to transition to sustainability.

Uber/Lyft have to hope they are early to autonomy, or else they will be wiped out. To me, it looks like Waymo or Tesla are the likely winners. I have my doubts about the lidar approach to autonomy, so maybe it will be Tesla. They have the fleet and the manufacturing capability to grow it. I can imagine Tesla ending Model 3 sales to end users if they do crack autonomy, as their manufacturing capability is better used to build for their own fleet needs. Of course, they would need to raise a lot of capital to finance it. It will be a bit of a game to persuade the market that Tesla should be worth more before they need to raise significantly.


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## Sagetology (Feb 5, 2012)

andrewf said:


> The unit economics are a problem. Selling $10 bills for $7 is an easy business to scale with sufficient capital, but hard to transition to sustainability.
> 
> Uber/Lyft have to hope they are early to autonomy, or else they will be wiped out. To me, it looks like Waymo or Tesla are the likely winners. I have my doubts about the lidar approach to autonomy, so maybe it will be Tesla. They have the fleet and the manufacturing capability to grow it. I can imagine Tesla ending Model 3 sales to end users if they do crack autonomy, as their manufacturing capability is better used to build for their own fleet needs. Of course, they would need to raise a lot of capital to finance it. It will be a bit of a game to persuade the market that Tesla should be worth more before they need to raise significantly.


I would tend to agree with this. I think it will come down to Tesla and Waymo. It is starting to seem like Lidar is more of a crutch. Tesla really could emerge as the leader but I'm not sure if it will happen by the end of this year like Elon predicts.


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## MrMatt (Dec 21, 2011)

Sagetology said:


> I would tend to agree with this. I think it will come down to Tesla and Waymo. It is starting to seem like Lidar is more of a crutch. Tesla really could emerge as the leader but I'm not sure if it will happen by the end of this year like Elon predicts.


I think self driving/ride hailing will turn into a commodity, like rental cars and taxi fleets.

The autonomous units will link up with the manufacturers and build cars that get you there.
For all the Tesla love, the big automakers can make cars cheaper than Tesla, all Tesla has is a brand, and possibly slightly ahead on battery tech.


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## andrewf (Mar 1, 2010)

Sagetology said:


> I would tend to agree with this. I think it will come down to Tesla and Waymo. It is starting to seem like Lidar is more of a crutch. Tesla really could emerge as the leader but I'm not sure if it will happen by the end of this year like Elon predicts.


To be clear, he talked about making Teslas 'full self driving feature complete' by end of 2019. That means they are capable of it, but not necessarily having deployed the technology to the fleet and obtained regulatory approval. He talked about launching Tesla network in 2020. I think the timeline will slip, but Tesla will be in a strong position just from the sheer number of cars that they can activate when they do get there.


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## andrewf (Mar 1, 2010)

MrMatt said:


> I think self driving/ride hailing will turn into a commodity, like rental cars and taxi fleets.
> 
> The autonomous units will link up with the manufacturers and build cars that get you there.
> For all the Tesla love, the big automakers can make cars cheaper than Tesla, all Tesla has is a brand, and possibly slightly ahead on battery tech.


Show me a car that has better total cost of ownership than base model 3 for ridesharing application. Gas cars will get crushed in this application by battery electric, and no one can compete with Tesla on cost for electric powertrain and useful distance. They are ahead on more than just battery tech. Their electric powertrain is more efficient than all the competitors. More efficient = more miles per kwh = lower cost for equivalent range.


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## kcowan (Jul 1, 2010)

Yes their biggest vulnerability is financial. And Elon is making it worse by offering to lease vehicles. I think he lacks financial acumen. And as a charter member of CMF, I find that a major shortcoming!


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## MrMatt (Dec 21, 2011)

andrewf said:


> Show me a car that has better total cost of ownership than base model 3 for ridesharing application. Gas cars will get crushed in this application by battery electric, and no one can compete with Tesla on cost for electric powertrain and useful distance. They are ahead on more than just battery tech. Their electric powertrain is more efficient than all the competitors. More efficient = more miles per kwh = lower cost for equivalent range.


They're ahead by 20-30%, which is substantial, but I'm not sure how much of a problem that is since Tesla still has a significant purchase premium.
I'd expect if GM threw another $10k into the bolt powertrain they could shrink the efficiency gap significantly.

For a ride sharing application with autonomous vehicles, range isn't the problem. They need enough cheap vehicles on the road to handle 2-3 hours of peak demand, which they are all capable of.

I see the business case for a ride share car as beign able to operate from 6-9, 3-6, and a "bonus" 12-3am (bars closing) on weekends. I want the cheapest vehicles I can that can handle that. I'm not sure that's the market Tesla wants. Fleet sales are very low margin.


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## andrewf (Mar 1, 2010)

Is it low margin? What is Tesla is operating said fleet, or taking a slice of revenue?


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## MrMatt (Dec 21, 2011)

andrewf said:


> Is it low margin? What is Tesla is operating said fleet, or taking a slice of revenue?


Fleet sales are low margin.
I think Uber is doing a good job trying to get different classes of vehicles, but nobody is saying "I must have a Tesla Model X Uber" People go and grab the closest/cheapest with a decent rating.
I'm waiting for the Expedia version of ride sharing, when you can see all the ride share companies with ETA and pricing in real time.
When you go and have good competition between the ride sharing services, the price will drop, and the companies left will be those who can operate most efficiently.

Right now I think that the conventional automakers still have an edge in manufacturing efficiency.


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