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Who says to invest in companies who's products you use? That does not seem like great advice. You should invest in companies who are undervalued by the market in your opinion, not just because you like the product but because you think they have a good business around it.
Uber is definitely undervalued on HN. They have so much more markets to enter.
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If you’re joining a $60 billion company with thousands of employees expecting rocket-ship growth, that’s kind of on you, I think. You wouldn’t expect that from a public company; why would you from a similarly sized company that just happens to be pre-IPO?
Amazon in 2016 was $502 a share, it is $1900 now Microsoft in 2016 was $51, $127 now Facebook was $97, $189 now We're not even talking about rocket-ship growth here. We are talking about option strike prices losing money in one of the most favorable economic time periods where massive, healthy public business did have monstrous growth. I would have at least expected price parity with other large companies - even that…
Taking these numbers at face value, I can't know if they account for it.
According to this article, stock was valued internally at $49/share in 2016 , so anyone joining in the last three years will not have enjoyed any sort of rocket-ship growth. https://news.yahoo.com/uber-employees-may-not-partying-15171...
> anyone joining in the last three years will not have enjoyed any sort of rocket-ship growth Uber was also somewhat unique among unicorns in uniformly blocking its employees from selling shares on the secondary markets.
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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.
Sounds like when a major college football team schedules a cupcake team for its home opener, and then loses.
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As a heavy early Amazon and Uber user, I'd say not really. Both are pretty revolutionary and I certainly have been paying Uber a lot more than I was paying Amazon when they just sold books.
Yes you might be paying Uber more, I pay them about $300-$400 a month between our occasional use and my teenage son getting around (still cheaper than a car + insurance), but they lose money on each ride. Amazon has high fixed costs while they were building infrastructure. Uber has negative marginal profits. Edit: negative marginal costs -> negative marginal profits.
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The investment bank sells a lot of shares to its own preferred clients. If the price then drops (because the initial offering price was too high) those preferred clients lose money. So the bank has every incentive to price it low, and usually does. So when the market goes even lower, we know that the IPO was done out of desperation and that early investors who had influence over the IPO price were eager to dump some…
If the underwriter has every incentive to lowball the price, why on earth was Morgan Stanly selling its clients ways to short the Lyft IPO? https://techcrunch.com/2019/04/05/morgan-stanley-which-is-un...
[0] https://www.bloomberg.com/opinion/articles/2019-05-07/lyft-s...
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.
Uber is valued more for its potential and growth. Uber is optimizing growth and revenue before it optimizes profit (which could take another decade). See Amazon.
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> So when the market goes even lower, we know that the IPO was done out of desperation How is that the correct conclusion. It sounds like the correct conclusion is they still over estimated the market price. Nothing about desperation for or against.
> It sounds like the correct conclusion is they still over estimated the market price The bank has every incentive not to do that. The bank must juggle the needs of its various constituencies, preferred investors (who provide capital expecting not to have it lose value right away), the firm (which wants to raise capital) and existing investors (who may want to liquidate). If a bank routinely over-prices IPOs, then pr…
The claim that any stock that is overvalued at IPO shows desperation is just not true, and it's the statement you are making.
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There's a limit to how much they can prop up the price though. If the market really hates the stock they won't be able to save it.
Yep. MS has around 27MM shares out there for stabilization pot IPO. Once they blow through that, it's the market's game.
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Uber has paying users. Facebook had advertisement targets. Doesn't make too much sense to conflate the two.
But you don't say directly which of the two is more desireable, the market unfortunately looks like it prefers advertising targets.