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Uber, and the madness in private equity

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Uber, and the madness in private equity

Recent valuation: $70 Billion, while making big losses. maybe $2-3 billion in current year

20170325_WBC243.png

Market Values of private equity deals got wildly high - above publicly traded companies.

Will the crash start in private equity?

UBER ISSUES: PREZ QUITS...

Uber is facing the biggest crisis in its short history
The Economist-23 Mar 2017
They include Uber's head of mapping, a former head of self-driving car ...
Yet Uber's enormous valuation also depends on the firm pulling off a ...
 
What Happens If Uber Fails?
The Atlantic-22 Mar 2017
Then you have a company like Uber, valued at $70 billion despite massive losses, and beleaguered by one scandal after another. In 2017 ...

The dot-com collapse two decades ago erased $5 trillion in investments. Ever since, people in Silicon Valley have tried to guess exactly when the next tech bubble will burst, and whether the latest wave of investment in tech startups will lead to an economic crash. “A lot of people who are smarter than me have come to the conclusion that we’re in a bubble,” said Rita McGrath, a professor of management at Columbia Business School. “What we’re starting to see is the early signals.”

Those signals include businesses closing or being acquired, venture capitalists making fewer investments, fewer companies going public, stocks that appear vastly overpriced, and startup valuations falling.

=====

> Uber News: https://www.google.com.hk/?gfe_rd=cr&ei=t6v2WNfKK4rD8AezuYmIDg&gws_rd=ssl#q=uber&tbm=nws

> Valuation : https://www.google.com.hk/?gfe_rd=cr&ei=t6v2WNfKK4rD8AezuYmIDg&gws_rd=ssl#tbm=nws&q=uber+valuation

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Uber Confirms Horrendous Loss in 2016

“Cementing its place as the most heavily-lossmaking private company in the history of Silicon Valley.”

On Good Friday, when markets were closed and when the entire financial world was tuned out, and when certainly no one was supposed to pay attention, Uber, the most highly valued – at $62.5 billion – and the most scandal plagued tech startup in the world, took the until now unprecedented step of disclosing its audited revenues and losses for the fourth quarter and for the full year of 2016.

Rumors of ballooning losses for 2016 had been swirling since last summer. Bloomberg reported in August that Uber had lost “at least $1.2 billion” in the first half. In December, Uber’s loss in Q3 was said to “exceed $800 million,” according to Bloomberg, and its annual loss “may hit $3 billion.” Others chimed in as some of Uber’s dozens of investors who’re getting its financial statements share them in dribs and drabs with the media.

But on Friday, Uber itself disclosed that it lost $2.8 billion before interest, tax, depreciation, and employee stock options – the latter likely being a big chunk, as the earnings of publicly traded companies that award stock-based compensation, such as Twitter, regularly show. Translated into a net loss, including the expense for stock-based compensation? Dizzying. But Uber wisely didn’t disclose it.

The Financial Times, which reported this disclosure, mused that Uber is “cementing its place as the most heavily-lossmaking private company in the history of Silicon Valley.”

In Q4 alone, it lost $991 million before interest, tax, depreciation, and stock-based compensation, up 5% from the losses in Q3 and nearly double its loss in Q1.

Uber recognizes the entire fare of shared carpool trips as revenue, though it then still has to pay the driver. This has the effect of inflating net revenues, though it conforms to Generally Accepted Accounting Principles (GAAP). For trips that are not shared, it only recognizes its commission (generally 25% of the fare) as revenues.

If you burn $3 billion in cash a year, and maybe more in 2017, at what point do you run out of rope? How sustainable is the will of investors to plow billions into Uber, only to see this cash go up in smoke in such a short time?

http://wolfstreet.com/2017/04/15/uber-confirms-horrendous-loss-in-2016/

http://wolfstreet.com/wp-content/uploads/2017/04/US-uber-revenues-losses-2016.png

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Uber Troubles

Uber Central lets businesses offer you a free ride

Engadget-3 hours ago
While Uber is scaling back some services, the ride-hailing giant is also finalizing some new features for their lucrative business customers.
 
/ 2 /
Uber just lost another exec
Fast Company-14 hours ago
No, really. Another Uber exec has bailed. Just weeks after losing president Jeff Jones, VP of mapping Brian McClendon, and head of public ...

Controversy

While Uber has seen great success, it’s journey has been a bumpy one. The company has been in and out of the news thanks to a number of recent legal (Alphabet is currently suing them for theft of its self-driving car technology) and reputation-hurting (note the company’s sexual harassment scandal and CEO Travis Kalanick’s rude behavior towards a driver) headlines. And from noncompliance issues in New York City to regulatory concerns and lack of driver background checks, Uber has drawn scrutiny and criticism, and has even been banned in The Netherlands and in parts of Thailand, India, and China.

It's no secret that traditional taxi services are not happy with the rise of Uber and other ride-hailing companies, and many argue that Uber should be subject to the same regulations that they face. In dozens of cities it has moved in to, Uber has faced intense opposition, lobbying, and legal challenges against it from these taxi companies.

Uber has also been embroiled in a long-standing battle with its drivers. A group of drivers first sued the company back in 2013, claiming they should be classified as employees rather than independent contractors. As a result, Uber had been set to pay up to $100 million in reimbursement damages to almost 400,000 drivers, but recently, a federal judge in California ruled that the settlement was unfair.

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Uber's competition is getting stronger

 

Lyft raises $500 million amid turmoil at Uber
CNBC-6 Apr 2017
Ride-hailing start-up Lyft has raised a new $500 million round of funding, a source told CNBC, bolstering its valuation to about $7.5 billion, ...

The valuation still leaves Lyft way below Uber, which is valued at $70 billion, but the timing comes amid a string of controversies that have left the ride-sharing giant in turmoil in recent months.

In March alone, Uber’s president Jeff Jones quit the company, one of the firm’s self-driving cars crashed on a public road in Arizona, and new taxi laws in Denmark meant the company will be forced to cease operations in the Scandinavian country.

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Uber takes $18 billion hit in mock funding round
International Business Times, India Edition-7 Apr 2017

In a survey done by CB Insights, 77 percent of the 3,500 respondents say they won't invest in Uber even at $50 billion valuation, a far cry from ...



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Will Uber Be the Hottest IPO of 2017?

by Madeleine Johnson

April 10, 2017

.

IPO Potential

Despite these controversies, investors are eagerly awaiting an Uber IPO. Many have believed, or hoped, the company would go public for a few years now, but Mr. Kalanick wants “to make sure [an IPO] happens as late as possible,” said in an interview with CNBC last year.

If and when Uber finally decides to go public, its potential would depend on the broader IPO market and economic environment. According to Renaissance Capital, IPOs only raised a paltry $18.9 billion in 2016, with annual proceeds falling to the lowest level since 2003. Just four companies filed public offerings that grossed over $1 billion.

Looking ahead, it’s difficult to pinpoint how busy the IPO market will be this year. Snap Inc. (SNAP - Free Report) , the parent company of Snapchat, finally made that giant step last month, but it’s hard to say what, and if any, other high-profile unicorns—i.e. Spotify, Pinterest, Airbnb, and yes, Uber—will follow. And recent high-growth IPOs like Twilio Inc. (TWLO - Free Report) and Nutanix (NTNX - Free Report) have traded strongly since their debut, a good sign for tech companies everywhere looking to make their trading debut.

How Might Uber Perform?

An IPO for Uber could be massive for both the company and Wall Street. It’s currently valued at $68 billion after a total of nine rounds of funding worth $12.9 billion since its launch. And thanks to Uber’s structure—a unique combination of transportation company, mobile Internet company, and real world engineering—the company has been touted as one of the best future IPOs.

It’s IPO, then, could go either way, but let one number stay in your mind: $68 billion. Let me write that again: $68 billion. This number is a hard one to forget, and a figure that will be on the forefront of many investors’ minds come the time of its public offering, as it impressively showcases just how far this startup has come in a few short years.

Now That Snapchat is Public, Which Tech Giant Could IPO Next?

You may be curious about the buzz surrounding Snap’s IPO, but should you buy up this tech stock? In the 2017 IPO Watch List, you'll get an inside look at Snap's exciting prospects and potential challenges.

==

> more: https://www.zacks.com/stock/news/255900/will-uber-be-the-hottest-ipo-of-2017

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Driverless Uber & the implosion of Private Equity valuations

 

I reckon that an implosion of massively overvalued Uber, will trigger an implosion of Private Equity valuations

 

Driverless cars? Maybe. Maybe not.

But now we have a driverless Uber

 

Uber CEO To Take Leave Of Absence, "Dimished Role" After Holder's Report On Workplace Scandals

20170613_uber.jpg

Uber no longer has a COO, CBO, CFO, CMO, or Head of Engineering; and is now temporarily without a CEO after the release of today's 'official' investigation into workplace scandals (by former U.S. Attorney General Eric Holder).

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I have been thinking this for sometime - Could be an unsustainable fad

 

Driverless Vehicles: The Next Dot-Com Bust

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BUMP - to combine two threads:

VIews : Thread name
 706 Uber, and the madness in private equity
 208 Driverless Uber & the implosion of Private Equity valuations
 914  Total views

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No LIFT in LYFT

105826661-1554151821246lyft.530x298.jpg
LYFT crashes...

LYFT... from Mar.2019 : 10d / Last: $51.09 -$4.09, -7.41%

2AFrMy3.gif

Shares of ride-hailing company Lyft fell 7.4% on Friday after larger rival Uber had a disappointing debut on the New York Stock Exchange, closing down 7.6%.

Throughout the morning, indications of Uber’s opening trade price dropped from an initial estimate of $46 to $48, until it opened at $42 per share. That’s below the $45 price of shares sold in its initial public offering, and even below the $44 low point of the company’s estimated pricing range last week. Uber closed at $41.57.

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UBER 'one of most disappointing IPOs ever'...

2d : Last: $41.47 -$3.43, -7.62%

G2GFhUD.gif

Uber is not having the uberprofitable day it was hoping for.

The ride-hailing company set its IPO at $45 per share on Thursday night, but ended up selling at $42 as soon as the market opened on Friday morning. Shares soon fell even lower to $41.06, nearly recovered to their original asking price by mid-day, and dropped once again to point Uber toward one of the worst first-day IPO performances of the decade.

Forecasts originally predicted Uber would price itself at $46-$48 per share, though its eventual decision of $45 per share with an $81 billion IPO was still massive. Still, the company never actually saw that set price materialize, and only peaked at $44.74 around 1 p.m. Uber's immediate 6 percent fall after the floor opened makes it one of just 60 companies who've seen a debut day loss of 5 percent or more in the past 10 years, Bloomberg notes. And there's a strong chance it could become the eighth of those companies to actually end up in the red for its first day.

Uber has barely gone a day without some kind of public scandal or outcry in the past two years, and this past week was no exception. Drivers for Uber and rival companies went on strike by turning off their apps on Wednesday to protest low wages and a lack of worker benefits. Uber later said it reached settlements with many of the 60,000 drivers who've protested, adding that those settlements would cost upwards of $170 million. The strike was planned to coincide with Uber's first day on the market, though it's unclear if the uproar had anything to do with Uber's dismal performance. Kathryn Krawczyk

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"seems to sentiment turning..."
What Uber's IPO tells us

"Investors are looking for a pathway to profitability"

"this company has stayed PRIVATE longer than any other ones... Late stages"

/ 2 /
Warren Buffett: I'm not buying the Uber IPO, but I've never bought any IPO

https://www.youtube.com/watch?v=CVzv7liXfFU

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Everyone HATEs UBER - maybe they should change the symbol to .... HATE

Most UBER investors screwed by IPO...

Trouble Finding and Keeping Drivers...

Uber's IPO this week came with predictable headlines about the rich getting richer — after all, when a company goes public at a valuation of more than $80 billion, that's what usually happens. This particular offering, however, created a whole lot of losers.

By the numbers: From 2016 onwards, per PitchBook, Uber raised $15.35 billion at $48.77 per share; it then raised another $8.6 billion in its IPO on Thursday at the slightly lower price of $45 per share. Those numbers dwarf the $5.6 billion that Uber raised before 2016. As of the close of trade on Friday, the market has now spoken: Uber shares are actually worth $41.57.

  • The bottom line: A whopping 81% of the $29.55 billion in equity that Uber has raised is underwater. IPO investors have lost $655 million, while investors from 2016 and 2018 have between them lost $2.27 billion.
  • Losers: Investors who bought Uber shares 3 years ago have lost 15% of their money, before fees. The opportunity cost is even greater: Investors in the S&P 500 have seen their money grow by 50% over the same period.
  • Winners: Lyft shares are also trading well below their IPO price, which didn't help the Uber offering. But so far all of Lyft's pre-IPO investors remain in the money. The most that any of them paid was $47.35 per share.

Why it matters: Uber is the ultimate minotaur — a company where billions of dollars of private-market funding were supposed to create a self-fulfilling prophecy of dominance and market power. It hasn't worked out like that. To make billions of dollars out of Uber, like Benchmark Capital did, the secret is to invest millions of dollars in the Series A and then allow other investors to invest the extra billions needed to scale the business and fund ongoing losses.

Our thought bubble, from Axios' Dan Primack: Uber loses more money than any other company to ever go public. It's the sort of thing that everyone ignores until they don't.

Go deeper: Uber's IPO got caught in a perfect storm

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Morgan Stanley Clients Saddled With Massive Losses After Disastrous Uber IPO

The technology bankers at Morgan Stanley are probably regretting all of the work they put in to steal the coveted 'lead left' spot in the Uber IPO from Goldman.

Though the bank will still take home a sizable chunk of the underwriting fees, minus whatever they've been obligated to spend to try and 'stabilize' the stock, according to Bloomberg, Morgan's hopes to strengthen ties between its wealth management business and its investment-banking side have been dealt a serious setback.

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MADNESS finally acknowledged

It was (previously) obvious they were wildiy overvalued. But the experts did not want to see.

The Insane World of VCs, Softbank, WeWork, Uber & Lyft (w/ Josh Wolfe and Michael Green)

Enthusiasm for big co's ("unicorns") ran rampant, & big co's got wildly overvalued

"Unless you are getting liquidity, there is a risk you will be holding zombie shares"

UBER ... 6mo / Last: $29.15

2VXYVLI.gif

LYFT ... All-data / Last: $39.57

NGzXG7t.gif

 

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The Great Unicorn IPO FAIL - Wall Street Learns Unicorns Aren’t Real!

During this report Tim Picciott CFP(R) CRPC(R) and Economic Analyst John Sneisen discuss the spat of terrible recent Initial Public Offerings.

They dig deep into WeWork and discuss the turn of events that led We to not Work.

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