Mega-Unicorn Status Won’t Save Uber
Let the $10 billion Uber IPO roadshow begin…
Uber, the highly touted rideshare company, announced it will roll out its IPO plan in the next day or so. Wall Street bigwigs and retail investors alike are salivating at the chance to own a stake in this mega-unicorn.
But as a tech market expert with over a decade of success on Wall Street, I have to ask why.
Uber’s IPO is all smoke and mirrors to me, and this is why.
Uber’s IPO: Biggest Threat to the Market?
Contrary to popular opinion, Uber is not a car service. Uber’s not a product. It’s an app, a technology — nothing more, nothing less.
Private-equitywise, it’s a black hole. Uber has never come close to making money, as my friend and market expert Jawad Mian noted in a tweet last month.
Uber’s a huge bubble — valued roughly at $120 billion, according to the latest reports — mega-unicorn status, right?
I’m Calling Bull…
The chart shows, as of last December, there’s been intense pressure on the company to IPO in the next three–eight months for a surge of capital.
Remember the black hole?
The company lost approximately $1.8 billion last year. That’s the closest analysts have been able to estimate. Today a Bloomberg report noted:
“Prospective investors are hungry for the minutiae, and they’re now armed with ride-hailing rival Lyft Inc.’s March listing as a reference point for picking apart Uber’s business and value.”
Speaking of Lyft’s IPO as a Test Case for Uber…
Early investors in the Lyft Inc. (NASDAQ: LYFT) IPO might be having a case of buyer’s remorse as prices began to return to reality on Monday, CNBC notes.
The ridesharing IPO seemed to capture investors’ imaginations when it debuted on the Nasdaq. The stock opened 23% above estimates and maintained lofty levels heading into the weekend.
But by the following week, the cosmic order of the universe shifted back into equilibrium. The joy of the initial offering wore off and Lyft shares cratered nearly 12% as we rolled into April.
Pesky fundamentals (or lack thereof) are taking center stage. Lyft’s shrinking share price is a stark reminder that the company is hemorrhaging money.
Uber, as we showed above, is also hemorrhaging cash.
Bloomberg is already calling the Lyft flameout “an ominous sign for the stampede of unicorn companies planning to follow the ride-hailing business to the stock markets this year.”
I’m predicting a similar fate for Uber and its IPO buyers.
When Uber goes public and the books do open up, the fizz will be off the bubbly before the toasts are finished.
And this could mean a drag on the tech sector specifically and on the market generally.
For Technology Profits Daily,
Chief Technology Expert, Technology Profits Daily