# Is Morningstar’s Horrendously Bad Uber Analysis a Preview of Uber’s IPO Propsectus?



## jocker12 (May 11, 2017)

The entire article (quite long but great read) - https://www.nakedcapitalism.com/201...er-analysis-preview-ubers-ipo-propsectus.html

Overview


Morningstar released a research report three weeks ago predicting that *Uber would become profitable in 2020* and could achieve an *IPO value of $110 billion*. Understanding the problems with Morningstar's report is important because it illustrates the exact process and challenges Uber will face when it tries to sell its shares to investors next year
Morningstar's analysis is horrendously bad. Its profit forecast depends on plugging $4.5 billion in arbitrary and indefensible P&L gains into its forecast spreadsheet. Its valuation estimate depends on the equally indefensible claim that 39% five-year CAGR demand growth will occur independently of pricing, industry profitability or economic conditions. It provides absolutely no evidence substantiating its various claims about Uber efficiency improvements, fails to explain the source of these efficiencies, let alone demonstrate how they could drive powerful P&L gains, or explain why they didn't generate profits until Uber's 11th year of operations. They omit major factors relevant to a legitimate valuation analysis, such as pre-2017 P&L results, cash flows, and the costs and returns from current investments in future businesses such as driverless cars.
Uber's IPO will be the biggest challenge in its history. Uber's Board believes it needs to achieve an IPO valuation north of $100 billion *to ensure all existing investors achieve the profits they are expecting*. The IPO process will inevitably result in Uber losing control of their heretofore tightly and effectively controlled media spin. The SEC requires that Uber release detailed, audited historical financial data, and independent financial analysts will be able to scrutinize their IPO forecasts and valuation claims
As Morningstar's atrocious analysis demonstrates, there is no legitimate way to reconcile a valuation estimate anywhere near $100 billion with objective data about Uber's abysmal economics and financial results.
For its entire history, Uber has gone to considerable length to evade public scrutiny of its black hole of losses and the dependence of its business on massive, and ultimately unsustainable investor subsidies, most importantly by presenting only fragmentary financial data that is largely non-comparable over time. Uber has succeeded nevertheless in using talking points that plays heavily on Silicon Valley mythology and libertarian gospel to create the impression that it is a highly successful venture. Uber is likely to rely heavily on PR and propaganda to convince investors it is worth over $100 billion.
Morningstar's report illustrate how difficult it will be next year for Uber to maintain its sales pitch in the face of hard financial data. A legitimate valuation would consider a wide range of objective evidence and critically scrutinize key company claims. Instead Morningstar's report uncritically repeats longstanding elements of Uber's sales talk. The report is not designed to help potential investors, but to serve as advocacy on behalf of Uber's current shareholders.
*Morningstar's report is potentially valuable to Uber because it allows them to claim that "independent" analysis by an "objective" financial firm endorsed the idea that Uber's is worth more than $100 billion, and that claims Uber is likely to make during the IPO process have been independently verified. *Given all of the problems and deficiencies documented here, it is important that no one ever grant any credibility to the profitability, valuation and long-term growth arguments Uber or others might make because Morningstar reached similar conclusions.


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## just_me (Feb 20, 2017)

It's a sales job. Wall Street has a lot of Uber shares to sell (er, cash in).


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## heynow321 (Sep 3, 2015)

just_me said:


> It's a sales job. Wall Street has a lot of Uber shares to sell (er, cash in).


Iirc, Wall Street (Goldman) was wise enough to tell boober to pound sand when they came looking for cash


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## uberdriverfornow (Jan 10, 2016)

Uber is going to be in for a rude awakening when they realize nobody wants their worthless stock.


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## just_me (Feb 20, 2017)

heynow321 said:


> Iirc, Wall Street (Goldman) was wise enough to tell boober to pound sand when they came looking for cash


That's entirely possible. I don't recall either way myself. What I do recall is how Wall Street and the vampire squid (GS) included used to package up these IPOs up nicely with glowing reports during the dot con days with the intent to get people to buy the stock. WS knew the stock was going to take a dive in six months. And, that was WS's portion that the investors were mostly buying at the IPO. Not much has changed since those days.

We used to have a NY Fed that regulated scammer practices like that from Wall Street and a NY DoJ that used to prosecute Wall Street bankers. Not so anymore.


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## 1.5xorbust (Nov 22, 2017)

It’s looking more and more like a tremendous short sale opportunity. Morningstar is normally a credible news source.


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## wontgetfooledagain (Jul 3, 2018)

None of you know jack shit about Uber's value or IPOs.


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## 1.5xorbust (Nov 22, 2017)

wontgetfooledagain said:


> None of you know jack shit about Uber's value or IPOs.


Thanks Dara.


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## njn (Jan 23, 2016)

Here's the over optimistic highlights from morningstar pitchbook. Maybe the saudis can buy uber outright along with tesla.

https://pitchbook.com/news/reports/...ick-up-investors-along-with-riders-in-its-ipo

*Key highlights:*

We assign Uber a fair value estimate of $110 billion as the firm is projected to increase its top line by 27% annually during the next 10 years, driven by continued expansion in new cities and regions globally, plus an increasing adoption rate as the company attracts more users.
We expect Uber to grab nearly 50% of the ridesharing market by 2022 (up from 29% in 2017) as it leverages its first-mover advantage along with its network effect and data moat sources.
We value Uber's total addressable market, which includes the aggregate of the global taxi, ridesharing, and food delivery industries along with the US markets for freight brokerage and the share we believe ridesharing companies can take from global public transport and US bikeshare, at $630 billion by 2022, representing a 26% five-year compound annual growth rate.
We believe autonomy is the most transformative technology set to affect the world of ridesharing; we see powerful economic forces driving autonomous vehicle adoption in the ridesharing industry, from which Uber may benefit.


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## Atom guy (Jul 27, 2016)

wontgetfooledagain said:


> None of you know jack shit about Uber's value or IPOs.


We live Uber's value every day. We see that Uber has chased the bus ride market to ridiculously low fares, and then STILL has to subsidize them. They have devalued the ride share concept to juice up a large user base, but that user base is illusory, since it relies on unsustainably low fares and subsidies on top of them. Drivers recognize that Uber is a circular scam, with Uber scamming the drivers AND passengers, drivers scamming Uber and the passengers, and passengers scamming the drivers and Uber. Uber doesn't really want to put out a quality product. They bank entirely on an unlimited supply of new, naive drivers, and on an endless supply of new passengers. That's the only way for them to get away with the Upfront Pricing thievery and have any hope of profitability. So when the entire business model is based on multiple deceptions, it's hard to see it working out.


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## heynow321 (Sep 3, 2015)

just_me said:


> That's entirely possible. I don't recall either way myself. What I do recall is how Wall Street and the vampire squid (GS) included used to package up these IPOs up nicely with glowing reports during the dot con days with the intent to get people to buy the stock. WS knew the stock was going to take a dive in six months. And, that was WS's portion that the investors were mostly buying at the IPO. Not much has changed since those days.
> 
> We used to have a NY Fed that regulated scammer practices like that from Wall Street and a NY DoJ that used to prosecute Wall Street bankers. Not so anymore.


https://www.bloomberg.com/news/arti...ave-passed-up-uber-share-sale-on-lack-of-data


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## uberdriverfornow (Jan 10, 2016)

njn said:


> Here's the over optimistic highlights from morningstar pitchbook. Maybe the saudis can buy uber outright along with tesla.
> 
> https://pitchbook.com/news/reports/...ick-up-investors-along-with-riders-in-its-ipo
> 
> ...


such bs

uber is already everywhere and they already lose 3 billion a year or more

even with the new surge scam they won't come close to profitability, especially when states start capping vehicles like NY is doing


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## goneubering (Aug 17, 2017)

njn said:


> Here's the over optimistic highlights from morningstar pitchbook. Maybe the saudis can buy uber outright along with tesla.
> 
> https://pitchbook.com/news/reports/...ick-up-investors-along-with-riders-in-its-ipo
> 
> ...


What's the problem?? They're only off by $100 billion!!


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## everythingsuber (Sep 29, 2015)

wontgetfooledagain said:


> None of you know jack shit about Uber's value or IPOs.


Actually drivers are more informed about Ubers worth than the general public.
Ubers product is for all intentional purposes ignorance. Poorly informed drivers operating at a loss. These people Uber find and share with the public who have the opportunity to exploit them ( The Sharing Economy).
Drivers know Uber is a bad product a 96% per annum turnover of drivers is proof of that.

So what is sustainability of a company that relys on a work force that is being exploited?

The general public only hear BS propaganda and like free stuff so they tend to try and stay willfully ignorant of the reality.

Drivers are fully aware of Uber reality.


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## heynow321 (Sep 3, 2015)

It's going to be important to pay attention to the lock up period for insiders. Remember, the biggest reason they're pushing to go public is b/c the early investors have had their capital tied up for 10 years now. They want it back. When it's first legal to do so (after the lock up period), insiders will be dumping like crazy. Wait for the initial moronic retail traders who will rush in and buy to exhaust themselves then start shorting/buying puts.


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## Buckiemohawk (Jun 23, 2015)

So this will be the nail in the coffin or do you think Uber will somehow squiggle out of this one...


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## Stevie The magic Unicorn (Apr 3, 2018)

Buckiemohawk said:


> So this will be the nail in the coffin or do you think Uber will somehow squiggle out of this one...


I think once they jack up rates and stop subsidizing rides that Uber's revenue is going to freefall.

After they Uber will have too much debt to support and it spin the drain.


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## goneubering (Aug 17, 2017)

uberdriverfornow said:


> Uber is going to be in for a rude awakening when they realize nobody wants their worthless stock.


You're in for a rude awakening if you think it's worthless.


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## exSuperShuttle (May 24, 2018)

Uber is worth something. Certainly NOT 100 to 110 billion. But it's worth something. Insider lock up period is VERY important too. Valuation just prior to that date is key. Look out as that date approaches or passes. Then it's .05 or .10 on the dollar after that.

All of the above only comes into play if Uber EVER shows a quarterly profit prior to the IPO. If not, it could be tanking from the get go.

As for Ubers rates to customers. As long as they remain somewhat lower than a taxi, they'll survive. To what extent, who knows.


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## jocker12 (May 11, 2017)

exSuperShuttle said:


> All of the above only comes into play if Uber EVER shows a quarterly profit prior to the IPO. If not, it could be tanking from the get go.


This is the reason Uber investors told Uber to sell their self driving car unit that swallows $200 million a quarter and gives no revenue.


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## kcdrvr15 (Jan 10, 2017)

What I think is this bunch of rats (uber) have been so successful at deluding their investors, deceiving their drivers and cheating every way they can, they think they can con the high stakes investors and the stock market before they hit bottom. The real smoke screen here is all this talk about an IPO, the business model is flawed, it is not sustainable, the only thing of value they really have is of the intellectual type, the software for the AI they are trying to develop. This whole rideshare scam is nothing but a way to collect the data they need to compile their AI programs into something that can be certified safe, and then installed in every vehicle sold in the world, think about it, what would the royalties be on this ? Kind of like seat belts, air bags, anti-lock brakes, all these tech innovations are mandatory equipment, and they all paid royalties. Oh you will still need drivers, but insurance costs will drop as they reduce the most common and expensive accidents, like rear end collisions.


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## jocker12 (May 11, 2017)

kcdrvr15 said:


> This whole rideshare scam is nothing but a way to collect the data they need to compile their AI programs into something that can be certified safe, and then installed in every vehicle sold in the world


AI is not what you think it is. The only applications where AI is working relatively well, in comparison to the past, are voice recognition and computer vision.

You can read this paper about deep learning and AI - https://arxiv.org/ftp/arxiv/papers/1801/1801.00631.pdf


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## Oscar Levant (Aug 15, 2014)

jocker12 said:


> The entire article (quite long but great read) - https://www.nakedcapitalism.com/201...er-analysis-preview-ubers-ipo-propsectus.html
> 
> Overview
> 
> ...


Historically speaking all the big transportation (except charter busses) companies go belly-up eventually, without exception. I'd purchase a big block of that stock and sell it short


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## Lee239 (Mar 24, 2017)

uberdriverfornow said:


> Uber is going to be in for a rude awakening when they realize nobody wants their worthless stock.


Spread the word that it's worthless or someone you know who knows people who love the service and use it will think it's gonna be like missing out on early Microsoft and be suckered into buying it.



everythingsuber said:


> Actually drivers are more informed about Ubers worth than the general public.
> Ubers product is for all intentional purposes ignorance. Poorly informed drivers operating at a loss. These people Uber find and share with the public who have the opportunity to exploit them ( The Sharing Economy).
> Drivers know Uber is a bad product a 96% per annum turnover of drivers is proof of that.
> 
> ...


 It's a bad job but it's a good product for customers. I'm a former driver that only lasted 45 days in a slow market that I was told was not slow 3 months previously by a few drivers that I used for short rides to the mechanic to pick up my car, they were making $100 a day each driver, I was lucky to make an average of $20 a day so I gave up.

It's a good service for a customer, instant cheap cab and the drivers are mostly very nice and have to be to get the 5 stars.


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## Stevie The magic Unicorn (Apr 3, 2018)

Lee239 said:


> Spread the word that it's worthless or someone you know who knows people who love the service and use it will think it's gonna be like missing out on early Microsoft and be suckered into buying it.
> 
> It's a bad job but it's a good product for customers. I'm a former driver that only lasted 45 days in a slow market that I was told was not slow 3 months previously by a few drivers that I used for short rides to the mechanic to pick up my car, they were making $100 a day each driver, I was lucky to make an average of $20 a day so I gave up.
> 
> It's a good service for a customer, instant cheap cab and the drivers are mostly very nice and have to be to get the 5 stars.


A florida driver who can't make money doing uber?

Never would have guessed that.

Sorry you fell for the scam


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## Lee239 (Mar 24, 2017)

Stevie The magic Unicorn said:


> A florida driver who can't make money doing uber?
> 
> Never would have guessed that.
> 
> Sorry you fell for the scam


Florida is a huge state you can only make money in the bigger cities like Miami, Fort Lauderdale, Tampa, Orlando (except for 60 cents a mile, but you can make it on volume of rides a large need from the theme parks) and Jacksonville, Most of Florida is a commuter state and everyone has a car even in the cities but in larger cities people Use Uber more often, I'm near a small city that had too many dirvers so it was a waste of time. Florida has 67 counties and less than 10 have major cities. A lot is spread out even though we have the 3rd largest population, plus it's seasonal and things pick up in the winter.


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## heynow321 (Sep 3, 2015)

People in Orlando are not making money on volume, they are just destroying their car faster


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## Stevie The magic Unicorn (Apr 3, 2018)

Lee239 said:


> Florida is a huge state you can only make money in the bigger cities like Miami, Fort Lauderdale, Tampa, Orlando (except for 60 cents a mile, but you can make it on volume of rides a large need from the theme parks) and Jacksonville, Most of Florida is a commuter state and everyone has a car even in the cities but in larger cities people Use Uber more often, I'm near a small city that had too many dirvers so it was a waste of time. Florida has 67 counties and less than 10 have major cities. A lot is spread out even though we have the 3rd largest population, plus it's seasonal and things pick up in the winter.


It's not even 60c a mile in Orlando, maybe 61 if you include the per minute charge.
The theme parks arn't a glut of money like everyone thinks, it's actually less per hour earnings once you factor in sitting in a queue to load. I make more money (even in a taxi) running dispatch all the time, the idiots go work around the theme parks and do horribly. The airport is no better either, 200 car queue that takes an hour or more to clear and even a fairly long trip (30 minute drive to disney) pays out less than $20 on uberX.



heynow321 said:


> People in Orlando are not making money on volume, they are just destroying their car faster


Uh yeah. Due to the spread out nature in Orlando I can barely pull in $1.25 per ALL miles driven most of the time, in a taxi, charging taxi rates, which results in 350-400% of uber pay rates.

On uberX losing money is a reality once you start adding in expenses. 10c a mile for gas and 10c a mile for other expenses and you wiped out half your revenue.

If i use the numbers i truly believe and know to be accurate, your at about zero.

It's something like this per 10 hours. $80-$100 revenue to $110 in deductions

On paper by IRS standards- $2.00- $3.5 loss per hour
My math- break even
Minimal expenses- $4.00 per hour profit
Gasoline only cost= about min wage.


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## Lee239 (Mar 24, 2017)

Stevie The magic Unicorn said:


> It's not even 60c a mile in Orlando, maybe 61 if you include the per minute charge.
> The theme parks arn't a glut of money like everyone thinks, it's actually less per hour earnings once you factor in sitting in a queue to load. I make more money (even in a taxi) running dispatch all the time, the idiots go work around the theme parks and do horribly. The airport is no better either, 200 car queue that takes an hour or more to clear and even a fairly long trip (30 minute drive to disney) pays out less than $20 on uberX.
> 
> Uh yeah. Due to the spread out nature in Orlando I can barely pull in $1.25 per ALL miles driven most of the time, in a taxi, charging taxi rates, which results in 350-400% of uber pay rates.
> ...


I thought rated went up in Orlando for 60 to 79 cents. Still ridiculous but a 25% or so jump

and it it's that bad why do people do it?


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## heynow321 (Sep 3, 2015)

Lee239 said:


> I thought rated went up in Orlando for 60 to 79 cents. Still ridiculous but a 25% or so jump
> 
> and it it's that bad why do people do it?


Bc There is a surprisingly large amount of people that cannot do basic math


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## UberBastid (Oct 1, 2016)

just_me said:


> That's entirely possible. I don't recall either way myself. What I do recall is how Wall Street and the vampire squid (GS) included used to package up these IPOs up nicely with glowing reports during the dot con days with the intent to get people to buy the stock. WS knew the stock was going to take a dive in six months. And, that was WS's portion that the investors were mostly buying at the IPO. Not much has changed since those days.
> 
> We used to have a NY Fed that regulated scammer practices like that from Wall Street and a NY DoJ that used to prosecute Wall Street bankers. Not so anymore.


No, what they do now is harass politicians and their supporters of a certain political party until they 'roll over' and create stories about other politicians; while ignoring crimes committed by members of the elite and ruling political party.


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## heynow321 (Sep 3, 2015)

the NY fed (and the rest of the regional banks) are owned by the big banks lol. you can literally find FRB (federal reserve bank) stock on the big banks balance sheets.


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## Stevie The magic Unicorn (Apr 3, 2018)

Lee239 said:


> I thought rated went up in Orlando for 60 to 79 cents. Still ridiculous but a 25%


No it went from 65 to 71, (5c increase to the driver, 6c increase to the customer)

or 48-53c paid to the driver.

The 71-79c jump an 8c raise to ubers cut, 0% increase to driver pay.

SO yes. Rates are up 21%, but driver pay is only up 10%, or less than half the most recent pay cut. (the most recent cut was from 65c a mile down to 48c. the ONLY EVER increase was 48c- 53c)

"we are increasing passenger rates but driver pay will not be affected" or some other such nonsense.



Lee239 said:


> (if) it's that bad why do people do it?


New suckers sign up and do it for a while, then quit when they discover how much it really costs to operate a taxi. While lying to new suckers in an effort to get them to sign up to uber and get a referral bonus.


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## TwoFiddyMile (Mar 13, 2015)

Lee239 said:


> I thought rated went up in Orlando for 60 to 79 cents. Still ridiculous but a 25% or so jump
> 
> and it it's that bad why do people do it?


Because they are too stupid to see there's no profit until their car breaks down and then POOF! no more gig.


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