Analysts still don't know what to make of Uber's expected $100 billion valuation, given its massive ongoing losses
After getting a first look at Uber's financials on Thursday, analysts are divided when it comes to Uber's expected IPO valuation of as much as $100 billion. But the one thing they can agree on is that no one really has a surefire way to assess it.
"I don't mind when a company, when they go public, if they have losses," Meeks said. But the fact that Uber's losses continue grow is what gives him pause. Uber reported an adjusted EBITDA loss of $1.85 billion in 2018 and showed slowing revenue growth, which has raised some concerns for investors and analysts as they watch Lyft's stock sink from its IPO price of $72 to $59.90 as of Friday's close.
"That's a huge fear," Ives said."That was a seminal event in terms of investing in tech stocks in the last 20 years." For Meeks, the comparison seems to serve as more of a warning for Uber. He noted that offering Amazon Web Services, Amazon's cloud product, was the turning point for the stock and now is key to its profitability. As of its Q4 2018, AWS represented 58% of Amazon's overall operating income.
There are some ways Uber's valuation could be justified, according to the analysts interviewed for this article, but right now, they remain difficult to predict. "I think a huge focus is Freight and Eats. Those are key ingredients in the recipe for success," Ives said."I think the one thing that stood out in the S-1 is just how large the revenue and the opportunity were there relative to what investors were expecting." Uber Eats, for example, grew gross bookings from $1.1 billion in Q4 2017 to $2.6 billion in Q4 2018.
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