# Uber's Unreal $70 Billion Valuation Really was Unreal



## MHR (Jul 23, 2017)

https://gizmodo.com/uber-s-unreal-70-billion-valuation-really-was-unreal-1821633772

Written by Harrison Webster

Today Uber, the biggest ride-sharing company in much of the world, got its hands on even more money by selling up to 20 percent of itself to Softbank and other investors in exchange for a giant sack of cash. But those investment dollars come with a catch. In order to raise more money, Uber sold a chunk of itself at a lower price than investors were once willing to pay. And with that, the company's estimated worth suddenly looks incredibly different. It's dropped by more than $20 billion, according to a _Wall Street Journal_ report.

Uber has made headlines for years over how much investors imagined the company was worth, based on what now looks like generous guesswork. But for more than a year, that figure was a jaw-dropping $70 billion. Overnight and into the new year, you're going to see a different number in headlines about Uber's business. According to the _Wall Street Journal_, that price is now $48 billion-still very, very big. But big as it is, we're looking at a more than 31-percent drop from its earlier value. Uber's unreal-looking valuation, it turns out, really was quite unreal.

As for what's causing the drop, maybe it's because Uber, as of a year ago, was still losing billions of dollars. Or maybe the company's awful behavior has simply caught up to it this year, resulting in new regulatory hurdles, swaths of legal battles, and, ultimately, a smaller-but-still-gigantic valuation.

Reached for comment, an Uber spokesperson did not address the details from the _Journal_'s report, only saying, "We look forward to working with the purchasers to close the overall transaction, which we expect to support our technology investments, fuel our growth, and strengthen our corporate governance."

Uber may no longer be worth more than Ford's 114-year-old automobile business. And apparently, it's no longer double the value of its home-sharing counterpart, Airbnb. But as far as we know, Uber is still making billions of dollars from rides, and now that the Softbank deal is done, the company is on schedule to go public in 2019. Someday soon, Uber's price tag could soar yet again, no matter what new secrets are dug upabout how the company has operated between now and then.


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## Jesusdrivesuber (Jan 5, 2017)

And 48 billion is still way off the actual mark.

The company is in it's 30ish.


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## heynow321 (Sep 3, 2015)

People are so stupid. $48 billion isn't big. What is berkshires market cap currently? Couple hundred billion?


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## Mars Troll Number 4 (Oct 30, 2015)

Once uber is profitable... (In my opinion IF)

It won't be worth 50 billion.


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## Cynergie (Apr 10, 2017)

I didn't need gizmodo to tell me that.....

This implies the new CEO & Uber Board of Directors were getting desperate. Finally admitted to the writing on the wall. And just like Fakebook, Uber finally reveals to world that its existence was always a gross over valuation. Unlike Fakebook, it may not survive this steep devaluation. Simply because Fakebook isn't developing game changing futuristic autobot technology, as a driver for future profitability. And so truly has an "asset light" inventory unlike Uber.

Until auto makers roll out the first batch autobots off their production assembly line, Uber will continue requiring billions in future financial fundraising rounds, investor and/or company fire sales like this one. Just so it can stop its treasury hemorrhaging from its million+ man driver fleet worldwide. That's on top of its ongoing legal woes from battling union prone countries for market entry, preserve its market share, settle with disgruntled employees, pacify its angry subcontractor drivers, and reduce public pessimism and overall bad PR toward the Uber brand.

Khosrowshahi has a 90 degree cliff hanger challenge in overcoming the FUBAR legacy he inherited from Travis. As a driver, one could almost feel sorry for him. Almost.

Trump Economics truly has a gift of prophecy


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## UberBastid (Oct 1, 2016)

If I was an older investor who bought based on a $70b valuation, I would be seriously considering slowly; as in ever so slowly, reducing my holdings.


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## Cynergie (Apr 10, 2017)

heynow321 said:


> People are so stupid. $48 billion isn't big. What is berkshires market cap currently? Couple hundred billion?


Perhaps a better question to ask is what's Didi's market cap given the similar strategy the Chinese government takes toward subsidizing/supporting their national ride share platform.

By 2Q 16 last year, Didi eclipsed Uber
https://www.cnbc.com/2016/05/13/how-big-is-didi-chuxing.html

Uber was bought out by Didi in one quarter later in 3Q 16
https://qz.com/746984/ubers-defeat-in-china-is-bad-news-for-chinese-drivers-and-riders/

I particularly love the Big Brother carrying a big whoop @$$ stick the Chinese government used to keep Uber out of their market. To keep "unfair" competitor practices to a minimum, Article 21 reads:

".._.Online ride-booking companies must not have unfair or illegal pricing behavior that disrupts market orders, or damages state interests or other operators' legal rights. They must not set prices below cost to push out competitors or dominate the market._..."

Oh well. So much for fake pings, fake surge, and investor subsidies trying to create the illusion of cheap pax fares. 

And now, one year later as of 2Q 17, Didi's latest fundraising round is an estimated $50 billion
https://www.cnbc.com/2017/04/28/didi-chuxing-raises-funding-round-valuation-china.html

Uber's platform subsidy strategy will ultimately backfire if Uber fails to show an increasing profitability trend with this latest round of cash infusion. Because unlike Didi--which has big name investor support the likes Alibaba, Apple, DST Global, and full backing of the Chinese government, Uber's investor resources in America's laissez faire business climate has definite financial limits. Which IMO, is why Uber made this seemingly radical move to raise cash. The secrecy surrounding Uber's accounting & finance books is going to be that much harder with 20% Uber now being owned by outside entities....



UberBastid said:


> If I was an older investor who bought based on a $70b valuation, I would be seriously considering slowly; as in ever so slowly, reducing my holdings.


don't worry. those old hand investors more than likely hedged their losses by buying long on unstable stock bets like Bitcoin.


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## Buddywannarideagain (Jun 29, 2017)

Fair fares in 2018. Drivers need more than 60 cents a mile. Please for the love of God!!


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## Undermensch (Oct 21, 2015)

Uber's true valuation reminds me a rapper: 50 cent


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## goneubering (Aug 17, 2017)

Cynergie said:


> don't worry. those old hand investors more than likely hedged their losses by buying long on unstable stock bets like Bitcoin.


Are you saying they would double down on crazy??!!


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## Cynergie (Apr 10, 2017)

No. I'm saying the smarter/conservative ones would've spent $10K+ on long buys on safer stock like blue chip, etc. aka invest in business that actually PRODUCE a prdouct or service like a Boeing, Proctor-Gamble etc.

The smarter/conservative ones who were the true whales, would've invested long in crypto-currencies. And bought around couple $5k+ in penny stocks...back in the day when Bitcoin was pennies on the dollar. Then woke up in the post Nov 8 2016 boom economy to find this:

https://finance.google.com/finance?q=currency:btc

On the other hand, it's nice to see that big Wall Street players like Merril Lynch exerting self control and common sense into this insanity. It appears some Wall Street ballers have finally learned their lesson from the 2008 financial bubble implosion that nearly destroyed global capitalism....

https://www.cnbc.com/2018/01/03/mer...-bitcoin-related-investments-report-says.html

Early investors who bought cheap and long on Bitcoin made out like bandits. But other potential investors are rightfully cynnical of this virtual tsunami. The title on this article made me lol:

https://qz.com/1171183/bitcoin-is-neither-legal-nor-illegal-in-india-and-everyones-confused/

edit: world's most infamous millionaire award goes to Laszlo Hanyecz who bought 2 piazzas for 10,000 bitcoin around May 17, 2010. Real world purchases like his put pressure on the penny stock value. Had he kept his investment, his windfall would've gave him a lottery jackpot of $146.5 M richer today. This would've made for a very sweet story if he'd been a homeless Uber driver....



Buddywannarideagain said:


> Fair fares in 2018. Drivers need more than 60 cents a mile. Please for the love of God!!


Uber can't. Not if they're to raise their profitability to get to IPO status. Drivers are a major operational expense drain on Uber's treasury. Consequently their desperate push to roll that first batch driverless cars off the assembly line. The day that becomes a reality, Uber's ~1.5M manpower global driver base will go the way of the T-Rex, the Dodo, and the typewriter maintenance man. LMFAO


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## goneubering (Aug 17, 2017)

UberBastid said:


> If I was an older investor who bought based on a $70b valuation, I would be seriously considering slowly; as in ever so slowly, reducing my holdings.


My guess is that's what happened.


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## 123dragon (Sep 14, 2016)

Cynergie said:


> But other potential investors are rightfully cynnical of this virtual tsunami.


I think that's what a lot of people have a hard time understanding. The virtual tsunami is everywhere not just bit coin. As technology change continues to accelerate the world is going to continue to change with it at a more rapid pace. We are living in an industrial revolution where the ability to use data is changing our lives.

Supply and demand are compressing which is what is bringing about this change more then anything else. The fact that I can go on my phone and buy just about anything and have it at my house 2 days later at no additional cost changes the way a consumer buys things. The supplier side is going to be the same as 3d printers mature. That's full compression where demand and supply are 0 day.

When we look at the 10 most valuable companies they have huge data capabilities:
http://fortune.com/2016/02/04/most-valuable-companies-fortune-500-apple/

Apple, Microsoft, Google, Facebook, and Amazon. Microsoft made a big switch into being more of a data company under the new CEO where cloud services became the major selling point. Apple's iPhone and Appstore ecosystem is a feed to data companies where Apple collect 30% on what they develop in the eco system makes them a data enabler.

The reason why data is so valuable is AI which we've been doing since the 80's. The reason it is relevant now is that our processing power capabilities and the amount of data available is large enough for us to more accurately predict things when we create algorithms. A lot of digital based companies like Amazon and Uber use AI to be a virtual barters to charge customers as much as possible for a good or service. On the flip side Uber uses AI to get drivers to come out when supply is not optimal.

Uber's real value is it's threat to Google. Having the logistics data of how people move around in a city and what they eat has a lot of use cases and can justify a lot of the current valuation. Uber can potentially open up front less restaurants for popular foods to sell to people in cities. They offer more efficient routing of people since public transportation doesn't change it's routes fast enough to match how populations migrate around in a city. If autonomous happens and Uber wins picking up passengers isn't where the valuation is. The valuation is going to come from all those cars and the data they collect which will be more vast then the data that any of the 5 data companies in the top 10 have.

An Uber can be driving down the street and see me walk into a clothing store like Rag and Bone using facial recognition. Another uber might identify when I walk out of there and identify I have a bag on me because I purchased something. Uber now knows I like to shop at Rag and Bone. Over time the data it collects will know my patterns for buying things. Uber could sell a service to competitor where they solicit me when they think I am about ot make a purchase to go to a competitor. This all feeds back to an example of the compressed supply chain. If Uber wins autonomous Uber's valuation will move toward or potentially exceed Google's valuation of 500 billion. That's what Softbank sees and they can care less about the short game of moving passengers around, it's all about the data for them.


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## goneubering (Aug 17, 2017)

123dragon said:


> I think that's what a lot of people have a hard time understanding. The virtual tsunami is everywhere not just bit coin. As technology change continues to accelerate the world is going to continue to change with it at a more rapid pace. We are living in an industrial revolution where the ability to use data is changing our lives.
> 
> Supply and demand are compressing which is what is bringing about this change more then anything else. The fact that I can go on my phone and buy just about anything and have it at my house 2 days later at no additional cost changes the way a consumer buys things. The supplier side is going to be the same as 3d printers mature. That's full compression where demand and supply are 0 day.
> 
> ...


You make a good defense of Uber's potential and valuation but not for the Bitcoin frenzy.


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## 123dragon (Sep 14, 2016)

goneubering said:


> You make a good defense of Uber's potential and valuation but not for the Bitcoin frenzy.


That's a fair statement, I was addressing the topic. I think bitcoin is in a bubble, which is not necessarily a bad thing.

Bitcoin though is not an efficient means of currency at this moment. 
Ray Dalio explains it best:


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## Cynergie (Apr 10, 2017)

Bitcoin would be validated if it could be based on the gold standard IMO


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## Brooklyn (Jul 29, 2014)

Cynergie said:


> Bitcoin would be validated if it could be based on the gold standard IMO


But the U.S dollar isn't based on the gold standard.


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## Cynergie (Apr 10, 2017)

I know. Which is exactly why crypto currencies like Bitcoin -- which has immense global financial impact -- should be based on it. It stops hyper inflation in value and lowers its volatility


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## Brooklyn (Jul 29, 2014)

Cynergie said:


> I know. Which is exactly why crypto currencies like Bitcoin -- which has immense global financial impact -- should be based on it. It stops hyper inflation in value and lowers its volatility


You think they'd let Bitcoin be based off gold when the U.S dollar isn't even? lol... people's heads would explode.


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## The Gift of Fish (Mar 17, 2017)

Cynergie said:


> Khosrowshahi has a 90 degree cliff hanger challenge in overcoming the FUBAR legacy he inherited from Travis. As a driver, one could almost feel sorry for him. Almost.


I always thought that the CEO position would only be taken on by someone towards the end of their business career, or someone who has made/will make enough money that they won't mind Uber being their last job. Or someone who is a huge risk taker. If he's the latter then he's very brave.


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## Cynergie (Apr 10, 2017)

Gen Xers put the "X" in eXtreme since the advent of extreme sports in the 90s

Nike's famous slogan to play hard was designed for Gen X.

From extreme base jumping, to extreme skiing, to extreme rappelling full Monty, to extreme Golden Parachuting from stratospheric soaring tech leviathans.

Gen Xers are the infamous generation for going whales in their work and play.

Khosrowshahi is a quintessential Gen Xer


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