There’s no chart to accompany this tout because Uber is not a publicly traded company. If it were, I would recommended shorting as many shares as you could get your hands on, since the four-year-old purveyor of on-demand transportation is probably as overvalued as any venture-stage companies will ever get. And that’s saying something, since at this moment in history, the combined quantity of greed, stupidity and easy money seeking quick investment returns has arguably never been more plentiful. Or reckless.
When Uber did a $1.2 billion round of financing in December, investors effectively valued the company at $40 billion. That’s more than 359 of 469 companies listed on the Fortune 500 — bigger, in fact, than any of the following giants: Kraft Foods Group, Delta Air Lines, General Mills, CBS, Rite Aid, Macy’s, Viacom, Dollar General, Kellogg, KKR, Nordstrom, Halliburton Company, Archer-Daniels Midland, Omnicom Group, Charles Schwab Corporation, YUM! Brands, DISH Network, Aetna, ConAgra, Hormel Foods and Best Buy.
Even when Uber was valued at a mere $18 billion, early backers stood to make 2000 times their initial investment. Will there ever be enough greater fools to allow them to cash out at even loftier valuations? My guess is no — that if and when Uber goes public, the IPO will stumble out of the gate and collapse before the first turn. That’s not to say Uber will have zero value, or that it will not continue to grow its business. But the growth will have to come the old-fashioned way, one passenger-dollar at a time. Those who think Uber will be able to grow revenues by diving into the delivery business are in for a rude awakening, since the logistical problems are proving to be more than merely daunting. Keep in mind as well that if the firm were to quintuple current revenues of around $2 billion, Uber’s 20% share of the take, using current benchmarks, would barely qualify it for inclusion in the Fortune 500.
By then, it may be apparent that Uber’s chances for growth outside of the United States are far more limited than any of the suckers investing in the company at current levels ever imagined. As recently as six months ago they reportedly were unconcerned about Uber’s bad reputation and hardball tactics. But it’s getting harder to ignore the negatives now that the company’s increasingly vocal opponents have taken to burning cars and beating up passengers to keep the firm out. Nor is it inconceivable that the violence will spread to Uber’s home turf, as licensed cabbies in New York, Chicago and L.A. dig in their heels. At that point, an IPO might not even be possible. And if the Dow is trading 5000 points lower, you can kiss Uber and a hundred other pumped-up companies with raggedy business models good-bye