Is Uber overvalued? | The Tylt

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Is Uber overvalued?
#UberAGreatBiz
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#UberOverrated

Uber is currently the king of Silicon Valley startups and that means big money. The ride-sharing company has raised over $10 billion with a valuation of over $60 billion. You are probably familiar with the company, so you know they have a real and unique value. But is it really worth that much? That valuation puts Uber's worth higher than the GM, Honda and Fordcompanies that make actual cars. What do you think, is this hype or are investors making a smart choice? Vote below! 💰

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This post breaks down 9 serious concerns, as well as an overall view of Uber that might leave one thinking that if it were a public stock (one of the signs of weakness) you'd sell it. Uber offers a commodity. It's subject to competition, which will always keep prices downand after it pays its drivers, it's making money, but not hand over fist. The valuation is predicated more on its growth, but it can only expand at huge scale. Bottom line, there is a lot to be skeptical about. 

'For a business that is highly price elastic (e.g. if you raise prices by 50%, consumers will definitely respond by purchasing much less), that is very concerning because it means they haven’t proven that their core product is fundamentally and sustainably profitable in any way that is consistent with their valuation. They are still selling $10 bills for $10.07. There is a valid argument that they are profitable in markets where they have hit scale, but that still means they are fundamentally reliant on that scale to make money. "We make money with scale and market dominance” is not the same as “every time we deliver our service, we make lots of money"'
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Let's have some real economists weigh in, shall we! 

Uber’s potential to transform its industry is already proving out. In 2009, there were roughly 111,000 chauffeured vehicles on the roads in the US. According to a Washington Post article published this year, Uber was adding 20,000 drivers a month.That number, roughly 18% of the total number of chauffeured vehicles on the road in the US just 5 years prior, is impressive on its own. It’s even more impressive if you consider the fact that it’s a monthly figure that’s been accelerating over time.

You can't underestimate disruption. Add self-driving cars on top of it, and you can see where things might go. How many car companies will license Uber's technology for their self-driving cars? If that happens, you instantly have a locked-in market.

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What is fiercely guarded as one of its biggest strengths — the controversial model of making all drivers operate as independent contractors — also means Uber allows drivers to work for its competitors. "Uber does not remove drivers from the driver pool. The platform is novel and revolutionary even, but not difficult to replicate. It will get replicated."
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There were many who scoffed at Facebook's valuation. Today Facebook is worth $340 billion. It pays to be the biggest disrupter in a sector.

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Ahhh the quaint days when Uber was valued at just $17 billion. Even then, the company had some cynics. 

"The value of any business, no matter what it does and where it is in its life cycle, is based on its capacity to generate real cash flows."

It all comes down to cash flow and if it's enough to justify the valuation.

FINAL RESULTS
Culture
Is Uber overvalued?
#UberAGreatBiz
A festive crown for the winner
#UberOverrated