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Uber Sets Valuation Record of $17B in New Funding

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Re: Uber Sets Valuation Record of $17B in New Funding

#41

Post by runako »

quaunaut wrote: post #27
mdemare wrote: post #25

Earlier quoted context omitted.

"From what I'm seeing, the entire US Taxi/Limo market is $11bn in value." That sounds incredibly low. That's twice the value of KING, and cabs are a lot bigger than Candy Crush. Maybe you mean the market is $11bn/year in revenue (or even in profits)?

Right, it's $11bn/year in revenue, averaged over 5 years. Is that not usually used in determining the value of a given market?

Yes, but you're comparing a company (Uber) with an annual revenue number ($11B), which is one property of a market.

For comparison, Apple is currently worth around $565B, but its revenues were $176B in the last 12 months. Chipotle is worth $17B, but its revenues were $3.4B over the last 12 months.

A firm's revenue and its value are related, but usually not equal.

Re: Uber Sets Valuation Record of $17B in New Funding

#42

Post by rayiner »

opendais wrote: post #9
austenallred wrote: post #4

The "this valuation is crazy" and "this proves a bubble" comments are filling up my Twitter feed and HN, but I couldn't disagree more. Call me crazy, but I think this valuation is completely fair. For a few reasons: Uber has serious revenue. They do more trips in San Francisco than taxis do. This isn't a pie-in-the-sky "there will be money there, I'm sure of it" thing. They bring in billions, and they're starting to…

http://www.washingtonpost.com/blogs/dr-gridlock/wp/2014/06/0... Given they are getting banned in entire markets, I think this evaluation is crazy. UPS, Fedex, etc already have software just as advanced for planning their routes. Uber isn't going to magically beat them somehow. Heck, part of why they lean on the USPS is there is some economics in delivery outside of big cities that create a situation where it makes no…

They have plenty of money to fight the regulatory situation, and it looks like they're gearing up to do so: https://www.uber.com/jobs/12416

("Urban transportation has looked the same for a long time—a really long time—thanks in large part to regulatory regimes that don't encourage innovation. We think it's time for change. Uber’s legal and public policy teams are helping facilitate that change around the world, and we’re looking for a hustler-wonk to help us develop that will change the world. This is no ordinary, run-of-the-mill gig -- seriously, have you read the news? We’re navigating some very interesting policy waters. Are you ready to dive in? This position is based in San Francisco or Washington, DC.")

Re: Uber Sets Valuation Record of $17B in New Funding

#43

Post by theIV »

untog wrote: post #23
austenallred wrote: post #4

The "this valuation is crazy" and "this proves a bubble" comments are filling up my Twitter feed and HN, but I couldn't disagree more. Call me crazy, but I think this valuation is completely fair. For a few reasons: Uber has serious revenue. They do more trips in San Francisco than taxis do. This isn't a pie-in-the-sky "there will be money there, I'm sure of it" thing. They bring in billions, and they're starting to…

They will be successful in San Francisco, of that I have no doubt. From what I understand the taxi market there is horribly broken, Uber saw a gap in the market and leapt at it. The mistake, IMO, is assuming that they will be able to replicate that in other cities. In NYC you can get a taxi 90% of the time by holding your hand up in a street corner. At peak times that's more difficult, but that's also when Uber has s…

You can get a cab in Manhattan, and maybe Brooklyn, 90% of the time. But, if you head to the Bronx (where I live), it's considerably more difficult. I can't really speak for Queens or Staten Island.

Up until the beginning of the year, 90% of the time you'll be hailing a gypsy cab. The only time you'd get a yellow when leaving the BX was at shift change which is around 5pm/5am for a lot of them. Not that there's anything wrong with a gypsy cab, but you're not supposed to hail them, which ties into a lot of the problems Uber appears to be facing in NYC.

I will say a lot has changed with the introduction of the Boro cabs (green cabs). I don't remember exactly when they were introduced, but getting a cab is considerably easier now.

So, while I agree with what you are saying, I think it's a little Manhattan-centric.

Re: Uber Sets Valuation Record of $17B in New Funding

#44

Post by untog »

theIV wrote: post #43
untog wrote: post #23

Earlier quoted context omitted.

They will be successful in San Francisco, of that I have no doubt. From what I understand the taxi market there is horribly broken, Uber saw a gap in the market and leapt at it. The mistake, IMO, is assuming that they will be able to replicate that in other cities. In NYC you can get a taxi 90% of the time by holding your hand up in a street corner. At peak times that's more difficult, but that's also when Uber has s…

You can get a cab in Manhattan, and maybe Brooklyn, 90% of the time. But, if you head to the Bronx (where I live), it's considerably more difficult. I can't really speak for Queens or Staten Island. Up until the beginning of the year, 90% of the time you'll be hailing a gypsy cab. The only time you'd get a yellow when leaving the BX was at shift change which is around 5pm/5am for a lot of them. Not that there's anyth…

Up until the beginning of the year, 90% of the time you'll be hailing a gypsy cab. [...] I will say a lot has changed with the introduction of the Boro cabs (green cabs).

Agreed - and that was sort of my point about Uber taking advantage of regulation, though I didn't phrase it well. The artificial scarcity of taxi medallions meant that demand outstripped supply outside of Manhattan. Now they're finally, slowly, fixing that.

Re: Uber Sets Valuation Record of $17B in New Funding

#45

Post by ChuckMcM »

This is an interesting valuation[1]. It shows that a workable replacement for an established service business (one suffering from large regulatory capture) is considered so significant from the perspective of these bankers. It also suggests that AirBnB could do really well if they went back to the well (not that I recommend it, money drags you down).

But more importantly this looks like an investment in a public company not a startup, or put another way, the difference between preferred and common stock has no doubt reached near parity. If the bankers believe the company will come out into the public markets at 34 - 50B then that puts them in some really rarified territory. Would the wider market share their enthusiasm? Or would this be like Facebook's debut, zero to down change for the first 6 - 12 months of existence.

The good news is it gives them a chunk of cash for the big fights they are fighting. Of course I'm curious if the management took any money off the table or if this is all earmarked for lawyers and expansion.

[1] I also agree the bubble hysteria is nonsense, whose money is at risk here? the .01% so don't sweat it.

Re: Uber Sets Valuation Record of $17B in New Funding

#46

Post by opendais »

rayiner wrote: post #42
opendais wrote: post #9

Earlier quoted context omitted.

http://www.washingtonpost.com/blogs/dr-gridlock/wp/2014/06/0... Given they are getting banned in entire markets, I think this evaluation is crazy. UPS, Fedex, etc already have software just as advanced for planning their routes. Uber isn't going to magically beat them somehow. Heck, part of why they lean on the USPS is there is some economics in delivery outside of big cities that create a situation where it makes no…

They have plenty of money to fight the regulatory situation, and it looks like they're gearing up to do so: https://www.uber.com/jobs/12416 ("Urban transportation has looked the same for a long time—a really long time—thanks in large part to regulatory regimes that don't encourage innovation. We think it's time for change. Uber’s legal and public policy teams are helping facilitate that change around the world, and w…

Tesla is larger and how well has that worked for them?

http://www.valuewalk.com/2014/03/tesla-motors-inc-tsla-now-b...

Uber, unlike Tesla, is costing the government money in the form of licensing fees. Its contractors are not paying for such licenses frequently. You can't simply "fight" the tax system like that.

Can they fight lobbying by the taxi companies? Yes. Can they convince the governments to go tax someone else instead? I doubt it. The taxi companies haven't managed that trick either.

Re: Uber Sets Valuation Record of $17B in New Funding

#47

Post by jabagawee »

quaunaut wrote: post #10

Prepending Edit: If you're reading this and have a lot more familiarity in how investments of this kind are made, and what kinds of things these investors are thinking, I really am making this post looking for education. I didn't finish college, and don't know a lot, but I'm trying. If you'd rather not stir the pot by talking here, my e-mail is in my profile. The one thing that makes me skeptical about this, is histo…

Uber could potentially expand the taxi/limo market though. Anecdotally, I know that my friends and I are willing to use Uber for trips where we would not consider a taxi.

Re: Uber Sets Valuation Record of $17B in New Funding

#48

Post by bcohen5055 »

rayiner wrote: post #42
opendais wrote: post #9

Earlier quoted context omitted.

http://www.washingtonpost.com/blogs/dr-gridlock/wp/2014/06/0... Given they are getting banned in entire markets, I think this evaluation is crazy. UPS, Fedex, etc already have software just as advanced for planning their routes. Uber isn't going to magically beat them somehow. Heck, part of why they lean on the USPS is there is some economics in delivery outside of big cities that create a situation where it makes no…

They have plenty of money to fight the regulatory situation, and it looks like they're gearing up to do so: https://www.uber.com/jobs/12416 ("Urban transportation has looked the same for a long time—a really long time—thanks in large part to regulatory regimes that don't encourage innovation. We think it's time for change. Uber’s legal and public policy teams are helping facilitate that change around the world, and w…

Until they win that fight there is significant risk. If this is the valuation with a huge legal battle factored in then what will it be without it? To me it doesn't make sense until the regulations are figured out.

Re: Uber Sets Valuation Record of $17B in New Funding

#49

Post by tomblomfield »

untog wrote: post #23
austenallred wrote: post #4

The "this valuation is crazy" and "this proves a bubble" comments are filling up my Twitter feed and HN, but I couldn't disagree more. Call me crazy, but I think this valuation is completely fair. For a few reasons: Uber has serious revenue. They do more trips in San Francisco than taxis do. This isn't a pie-in-the-sky "there will be money there, I'm sure of it" thing. They bring in billions, and they're starting to…

They will be successful in San Francisco, of that I have no doubt. From what I understand the taxi market there is horribly broken, Uber saw a gap in the market and leapt at it. The mistake, IMO, is assuming that they will be able to replicate that in other cities. In NYC you can get a taxi 90% of the time by holding your hand up in a street corner. At peak times that's more difficult, but that's also when Uber has s…

Uber is 30-40% cheaper than London cabs. Uber has rattled the cab-drivers so much that they're staging a protest next week to try to pressure cab regulators into blocking Uber's expansion.

http://www.theguardian.com/uk-news/2014/may/30/will-uber-kil...

Re: Uber Sets Valuation Record of $17B in New Funding

#50

Post by opendais »

lotsofpulp wrote: post #36
opendais wrote: post #21

Earlier quoted context omitted.

They are expanding on regulation arbitrage. Being able to bend and/or break the rules by using contractors. http://bits.blogs.nytimes.com/2014/04/17/uber-faces-rebukes-... "Oh lets operate in Paris and not pay the licensing fee for a taxi service." Etc. They've been completely and/or partially banned by more markets, larger markets than the entire country of Colombia at this point. It is the same thing as AirBNB. You…

It's a fantastic business model (low liability, high scalability), and if they can pull it off, it will be worth way more than $17B. That's the bet that these investors are making. Same thing with AirBnB (and many many other tech companies).

Yes but the market isn't that large and if they can pull it off, so can other people.

Even if Uber manages to capture 25% of the market, it isn't going to hit $170B market cap.

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