With this above chart in mind and the performance of Uber today, let’s revisit an excerpt from my note from last month …
Pro Perspectives – April 16, 2019
“Lyft and Uber, dumping shares on the public at a combined $140 billion plus valuation, may mark the end to the Silicon Valley boom cycle.
As we know, Lyft was valued as high as $25 billion when it started trading publicly. Some paid a $25 billion valuation for the privilege of owning a company that did a little over $2 billion in revenue, while losing almost a billion dollars — with slowing revenue growth and widening losses. It has now shed about $9 billion in market cap in thirteen days.
Uber is on deck. Uber filed its S-1 this week. In this public disclosure document, we find a company that has privately raised $24 billion, valued at $68 billion in the private market, that has been thought to float shares at as much as $120 billion valuation. This is a company that (like Lyft) also with slowing revenue growth and widening losses. Losses? The S-1 shows a swing from $ 4 billion loss in 2017, to a near $1 billion profit in 2018. But if we back out the a couple of unusual items (like the gain of a divestiture of some foreign businesses and an unrealized gain in an “investment”) the company lost $4.2 billion on $11 billion in revenue.
As we discussed last month, the hyper-growth valuations on these perceived hyper-growth companies, are unlikely to get hyper-growth at this stage. That will be a problem for those taking the bait on the IPO.”
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