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Uber opens at $42 per share

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Re: Uber opens at $42 per share

#101

Post by exogeny »

sytelus wrote: post #87
ufmace wrote: post #11

Did I miss something? I thought Uber was still a long way from being profitable and had no plausible plan for how to become profitable.

Amazon didn't turned profit for first 5 years or so after IPO. If you go back 15 years down the history, you will find many articles/analysis doubting if they would ever become profitable. However no one doubted that online retail was the future and brick-and-mortar stores will increasingly become part of the history. I see a lot of parallels here. No one doubts anymore that app-based cabs are the future and traditio…

This is a foolish viewpoint. Amazon got immense economies of scale as they grew, Uber’s costs scale alongside it.

It drives me crazy that so many people equivocate them.

Re: Uber opens at $42 per share

#102

Post by eigenvalue »

throwaway66666 wrote: post #82

Unprofitable companies are the only ones that really benefit from IPOs. An IPO is basically a way for the company to raise money, but tis time straight from the public. Usually when it gets harder and harder for them to attract private investors. The IPO listing basically guarantees that they won't take the public's billions and run. Successful companies with perfect cash flows (think of Github, Valve, IKEA) always t…

This is only true in general for tech companies because they tend to be "capital light"-- they don't require a lot of traditional capital assets such as factories and warehouses. Generally, the only tech companies which require a lot of capital are the ones that are burning cash and need to replenish their coffers. But IPOs can greatly help jump-start the growth of more traditional companies which are often constrained by lack of cash as they grow sales organically, even if they are quite profitable on a net income basis. This allows these companies to open new plants and stores and to hire people to develop new products. As much as tech increasingly dominates the economy, it's far from the only industry that matters.

Re: Uber opens at $42 per share

#103

Post by chollida1 »

Thaxll wrote: post #79
chollida1 wrote: post #3

Some notes from watching Uber open: - if it closes below $45(its IPO price) it will be the first time since 2008 that the happened for a major IPO - TD Ameritrade executed more orders in the first 10 minutes of trading than they did for the first 2.5 hours with Lyft. - Uber is 9% of all trading at TD Ameritrade, retail loves this stock, - market is down today, which isn't helping Uber but its probably not much of a f…

"market is down today, which isn't helping Uber but its probably not much of a factor" It's actually a big factor.

> "market is down today, which isn't helping Uber but its probably not much of a factor"

> It's actually a big factor.

I assume you are trolling but just in case....

the SPY is now up on the day and Uber is still below its IPO price, so I guess we can put to rest the idea that a down market is a big factor in Uber trading below its IPO price.

Re: Uber opens at $42 per share

#104

Post by throwaway082729 »

rtempaccount1 wrote: post #49
malvosenior wrote: post #13

Earlier quoted context omitted.

Just like Amazon at its IPO.

My feeling though is that Amazon had a much larger moat to build, with distribution networks, warehouses, logistics etc. With Uber, what's their moat, so that when they raise prices to become profitable users don't just move away? Lyft/local taxi companies/public transport, all have the infrastructure to provide the service that uber provides.

Lyft has to be in business till then. Local taxi companies are more expensive than Uber and inconvenient. Public transport is barely used. Uber is providing a subsidized public service while employing a lot of people.

The moat is there but the question is one of diversification and sustenance as a public company. In the coming days, there'll be a massive internal push to reduce costs, diversify and become profitable. If the foundation of the company is strong, they'll be able to get through this period. Instead, if most of the early employees jump ship (which I strongly suspect is likely to happen), it's going to meander. For Uber's own sake, having a mature and repentant Travis back might not be a bad thing. They'll need a second wind at some point.

Re: Uber opens at $42 per share

#105

Post by zd123 »

wesammikhail wrote: post #67
zd123 wrote: post #59

Earlier quoted context omitted.

It’s not arbitrary at all. IPOs are structured by investments banks to ‘pop’ on the first day. If the closing price is below the IPO that is generally regarded as a failure and may imply over-valuation.

> If the closing price is below the IPO that is generally regarded as a failure and may imply over-valuation. Generally regarded by whom* exactly? The world is full of examples of IPOs that did badly on opening day/week but soared like mad afterwards. These generalizations and pretense of knowledge helps no one; especially considering that "over-valued" is not something that can be determined in a short period of tim…

It’s considered an over-valuation by investors and anyone who has ever worked in a sellside investment bank or on IPOs.

The goal of the investment bank is to work with the company to come up with a sensible valuation that will clear and pop on the IPO date. The bank has to take into account the market conditions and investor appetite when structuring the trade and setting the price. It is also why you hear of company’s pulling out of IPOs when market conditions are not favourable.

I don’t follow your point exactly, if the value of the asset is relative to the context it presents itself, and the price you set for the IPO is not consistent with the said context, then you are incorrectly valuing the asset. The asset can be under or overvalued.

For the record I have actually worked on IPOs at an investment bank structuring these kind of trades, so it’s not a pretense of knowledge on my part.

Re: Uber opens at $42 per share

#106

Post by taytus »

throwaway66666 wrote: post #82

Unprofitable companies are the only ones that really benefit from IPOs. An IPO is basically a way for the company to raise money, but tis time straight from the public. Usually when it gets harder and harder for them to attract private investors. The IPO listing basically guarantees that they won't take the public's billions and run. Successful companies with perfect cash flows (think of Github, Valve, IKEA) always t…

I was reading your comment and nodding until this part:

>think of Facebook, which now has investor pressure to increase the price, which results in careless decisions about data handling, privacy etc

Trying to frame FB as a "bunch good kids under pressure" is a monumental mistake. Data has always been their business, selling ads and don't giving two shits about security is part of their DNA

Re: Uber opens at $42 per share

#107

Post by hayksaakian »

eigenvalue wrote: post #102
throwaway66666 wrote: post #82

Unprofitable companies are the only ones that really benefit from IPOs. An IPO is basically a way for the company to raise money, but tis time straight from the public. Usually when it gets harder and harder for them to attract private investors. The IPO listing basically guarantees that they won't take the public's billions and run. Successful companies with perfect cash flows (think of Github, Valve, IKEA) always t…

This is only true in general for tech companies because they tend to be "capital light"-- they don't require a lot of traditional capital assets such as factories and warehouses. Generally, the only tech companies which require a lot of capital are the ones that are burning cash and need to replenish their coffers. But IPOs can greatly help jump-start the growth of more traditional companies which are often constrain…

Do IPOs usually generate new funding for the IPO company?

IPOs seem serve as an `exit` for private investors who bought in while the company was private?

Re: Uber opens at $42 per share

#108

Post by radicaldreamer »

throwaway66666 wrote: post #82

Unprofitable companies are the only ones that really benefit from IPOs. An IPO is basically a way for the company to raise money, but tis time straight from the public. Usually when it gets harder and harder for them to attract private investors. The IPO listing basically guarantees that they won't take the public's billions and run. Successful companies with perfect cash flows (think of Github, Valve, IKEA) always t…

A lot of sweeping assumptions and generalizations going on in this one...

Re: Uber opens at $42 per share

#110

Post by 24gttghh »

BinaryIdiot wrote: post #68
bfrog wrote: post #36

Earlier quoted context omitted.

With the burn rate uber has, it'll be bankrupt in < 2 years. There are no other suckers to buy in after the public.

Right? This is what I don't understand. Everyone keeps saying the only way they make money is with autonomous cars but they're not even close with being able to do that (probably 5 years, at a minimum, and that's in small select areas). With such a high burn rate, what are they going to do? From everything I read they're not like Amazon where they can just "turn on" monetization unless they're going to hike up their…

>...unless they're going to hike up their prices.

I assume that's what any company like this does eventually once they've captured enough of the market.

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