
Uber prices blockbuster IPO conservatively to raise $8.1B - samsonradu
https://www.reuters.com/article/us-uber-ipo-preview/uber-prices-blockbuster-ipo-conservatively-to-raise-8-1-billion-idUSKCN1SF16G
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iandanforth
If you're planning on buying Uber stock can you walk me through your
reasoning?

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panarky
How big is the worldwide market for 1) personal transportation, 2) package and
parcel delivery, and 3) 30-minute delivery of prepared foods, groceries,
pharmaceuticals, auto parts, etc.?

Can Uber capture 10% of that combined market opportunity with the efficiencies
that come from globally optimized routing of all those trips?

Can Uber inside-out the company so others can execute on its platform, with
Uber taking a cut?

If so, then an $80 billion present value seems low.

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celticninja
They have been going a decade, they havent turned a profit yet, in fact they
have been burning through capital. What is going to change in the next decade
that means they will return a profit consistently enough that either dividend
payout will occur or a higher share price will be achieved?

Seems to me that as soon as Uber find out how to turn a profit thats when
copycats can jump on board with their app and start taking a slice of ubers
cake. Afterall they wont have long term investors to repay so their prices
could be lower than Ubers, making the value proposition of uber even worse.

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djakjxnanjak
What makes you think they are even trying to make a profit? Uber has investors
willing to throw billions at them to spend on growth, why wouldn’t they take
it?

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bduerst
Going public means a different strategy for the board.

Up until this point Uber has been a hot investment ticket for VCs, and the
existing investors have been incentivized to pump up the valuation to improve
their position. This strategy involves self-driving cars and helicopters and
edgy vaporware - basically creating these tactical hype moments for the Uber
brand.

Now with public investors, the hype strategy isn't sustainable and the board
will need to turn a profit (eventually) or be ousted by public owners who
don't want to see their shares in a company be destroyed.

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mr_tristan
I'm only starting to hear that Uber intends to replace public transportation:

> Our Personal Mobility TAM consists of 11.9 trillion miles per year,
> representing an estimated $5.7 trillion market opportunity in 175 countries.
> We include all passenger vehicle miles and all public transportation miles
> in all countries globally in our TAM, including those we have yet to enter,
> except for the 20 countries that we address through our ownership positions
> in our minority-owned affiliates, over which we have no operational control
> other than approval rights with respect to certain material corporate
> actions. We estimate that these 20 countries represent an additional
> estimated market opportunity of approximately $0.5 trillion.

See "Our Market Opportunity" section in the S1
([https://www.sec.gov/Archives/edgar/data/1543151/000119312519...](https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm#toc647752_4))

This seems quite ... optimistic to me. I'm not sure how many public
transportation companies actually operate at a significant profit, such that
they can undercut. It also seems risky, in that they might generate a huge
backlash if they try to do the whole "we're just gonna loss lead until we're
dominant, then jack up the price" strategy.

I'm guessing there is section of the population that says "screw it, I'll rent
a car" where public transportation is quite slow, but replacing public
transportation for poorer people is just going to be losing money. Given that
Uber is already losing money, I'm just wondering how you'd develop a model
where this TAM makes sense.

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b_tterc_p
There are many profitable subsections of public transit. The issue is the it’s
a PUBLIC resource. They’re not run to maximize profit. They also run many
lines which are not profitable. If a private company tried to steal the
business of the profitable subsections it would put the non profitable ones at
risk. Smart governments would outlaw such competition.

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notahacker
They wouldn't even need to outlaw competition in most cases of profitable
subsections of public transport, because a profitable commuter train into
$busycity /= a potentially profitable service driving commuters in large
numbers of small vehicles through heavy traffic to the same destination...

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patfla
I'd curious to see an explanation of just how the ride-sharing business might
be profitable.

I assume this:

"Uber’s chief executive, Dara Khosrowshahi, argued that Uber’s future was not
as a ride-hailing company, but as a wide technology platform shaping logistics
and transportation."

implies that Uber hasn't figured it out.

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SilasX
"Can you give us $8 billion for 10% of this venture so we can, you know,
figure out a way to make money?"

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DamnYuppie
This is was done for quite awhile for Amazon.

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patfla
Part of the way I remember the early Amazon is they were bootstrapped by the
fact that web purchases were, for a time, exempted from state sales taxes.

Some of that history here it would seem:

[https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat...](https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States#Internet_transactions)

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raz32dust
I am not planning to buy, but if I would consider, my reasons would be
specifically to not bet on self driving cars. I don't foresee self-driving
cars to be ubiquitous in the very near future (5 years). Until then, Uber's
presence and driver network can ensure that they are profitable in current
markets. They already are in major cities.

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brianwawok
Don’t they spend a lot more on self driving than say lyft? I think a bet on
Uber is a bet they win self driving. A bet on taxi apps is a bet on lyft.

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pen2l
But hasn't Google invested a couple billion on Lyft? And since Google is the
leader in self-driving, might not Google help Lyft in its self-driving
endeavors -- therefore making Lyft more able to pull-off a fleet of self-
driving taxis?

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gamblor956
Self-driving cars are _more expensive_ than a human-driven fleet. Lyft would
need to own (or lease) the vehicles themselves, and pay all the associated
maintenance costs. Their current business model is entirely predicated on
_not_ paying those costs, and nothing about self-driving will provide the
necessary margins for the economics of a self-driving fleet to pan out.

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brianwawok
> Self-driving cars are more expensive than a human-driven fleet.

Only in the very short term. Over 10 years the cost of self driving is much
much less than the cost of paying a worker to drive a car for 10 years, once
the tech is developed and good enough. Just a matter of who wins that race -
and how long they win that race for. If you beat the rest of the market by 10
years, there is some serious profit to take. If your competitor finishes 10
years of research 3 months after you, you are in trouble.

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6gvONxR4sf7o
Wall street is crazy to me. They're losing out on a ton of money to avoid
articles about "OMG the price isn't higher than last quarter!"

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plouffy
I recommend you read
[https://www.bloomberg.com/opinion/articles/2019-05-09/the-
ub...](https://www.bloomberg.com/opinion/articles/2019-05-09/the-uber-ipo-day-
is-finally-here) to get a better idea what is actually going on. Nothing
crazy.

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jcfrei
The fact that this is the most money losing company ever to IPO should raise
some eyebrows.

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celticninja
Early investors need to recoup something, so thats going to come from retail
investors and pension schemes. When the share price halves in 12-24 months
time the early investors and founders will be so rich they wont care.

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powera
This whole thing is a load of spin.

If they could have gotten a higher price, they would. Uber stock is going to
be lower than this valuation in a month's time, mark my words.

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sonnyblarney
"If they could have gotten a higher price, they would" \- this is very true.

But consider with every price is risk.

It may very well be that Uber wants to limit risk of some debacle and is
taking a conservative approach, which is reasonable.

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asdf21
I will be shorting this stock. It's obvious to me that Tesla will be eating
Uber's lunch when it comes to Autonomous driving. In fact, I believe this
entire IPO is just a way for investors to try to minimize and spread out the
losses they know they will incur from Uber going under.

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fullshark
Nothing is obvious when it comes to how autonomous vehicles will shake out.

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DevX101
That autonomous driving is coming is inevitable. The scale and timing I can
debate though.

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Tiktaalik
A moon base must have seemed inevitable to those in the 1960s too.

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xmprt
1960s is a bit too optimistic. I personally think it'll happen in the 1970s.

