The spectacular orgy of greed surrounding Uber’s impending IPO shows how out-of-whack valuations have gotten. Wall Street thinks the ride-hailing company could fetch as much as $120 billion when it is retailed to the rubes early next year. That’s nearly double the valuation of Uber’s last fundraising round just two months ago, according to the Wall Street Journal, and more than the combined value of General Motors, Ford and Fiat Chrysler. For further comparison, the biggest-ever deal in the defense sector, a proposed merger between Harris and L3 Technologies, would be worth a measly $33.5 billion. Are  investors out of their minds? Uber, after all, has little physical substance and no profits. It exists in the form of a smartphone application, a few office buildings and a global network of freelance drivers who struggle to make a living at it.

The fact that Uber hasn’t booked any profits is no drawback for Wall Street’s gifted pitch-men, who have always lived by P.T. Barnum’s dictum that there’s a sucker born every minute.  These shysters regard earnings for IPO companies as an abomination, since, once  a company starts making money, its shares can be marked-to-market to reflect a price/earnings ratio. The last thing in the world Uber insiders want is earnings, since they provide a reality check against whatever story deal-makers have concocted to hype the company’s supposedly limitless potential.

An Uber-Killing App Already Exists

Investors clamoring to pay $120 billion for Uber had better consider that the company’s future is just as vulnerable to disruptive new technologies as the taxi fleets Uber and Lyft have decimated. Are the yokels who will be bidding hand-over-fist for IPO shares aware there’s a phone application that makes it possible for anyone to start a ride-hailing company practically overnight? That’s right. The software handles every task that Uber’s does, soup-to-nuts, including insurance, mileage charges, routing, pickup and delivery.  Will Uber and Lyft be able to compete with 50 million scheming, dreaming entrepreneurs who can leap into the ride-hailing business and have a dozen subcontractors working for them with less work than it takes to run a hot dog cart?

A $120 billion valuation for Uber would be the slickest con-job ever foisted on retail investors. Under the circumstances, a stock-market crash before the IPO is probably the best thing that could happen to them, since it would bring the deal back down to earth, perhaps in the $15B-$20B range. That would still be absurd by the standards of yesteryear, when even the most innovative companies had to earn their way to success. No such demands are placed on hot upstarts these days, and that’s why this is not going to end well.