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Thread: Uber's enormous, vague IPO prospectus is an outrage

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  1. #1

    Uber's enormous, vague IPO prospectus is an outrage

    https://www.ft.com/content/60ab80e2-...9-8c855179f1c4

    30 Apr 2019

    Last week, Uber told investors that it hopes to raise $9.5 to $10bn in its upcoming initial public offering at a price that could value the ride-hailing company at more than $90bn.

    The 431-page updated prospectus was filled with lawyerly phrases and volumes of information on potential risks, but it left many serious professional investors wondering why a company that loses $3bn annually would be worth that much. The information that financial analysts would need simply wasn’t in there.

    A solicitation for so much money with so little information is an outrage, and a sign that something of central importance has gone wrong in US public markets in recent years.

    It wasn’t always like this. The prospectus for Microsoft’s landmark 1986 IPO was 52 pages and provided plenty of clarity about Microsoft’s business and how to value it.

    Compare Uber’s IPO to Microsoft’s and it’s easy to see why fast-growing, innovative companies and their big-money backers prefer to find each other in private deals rather than on stock exchanges.

    Despite voluminous “disclosure”, today’s public investor often receives much less concrete information than their private counterparts. Obsolete information systems and regulations have become an obstacle to the very transparency they were designed decades ago to enforce.

    Here’s a small example: the US government categorises Uber as a “Prepackaged Software” company, just like Microsoft. Yet Uber’s arch-rival in app-based transport, Lyft, is considered a provider of “Business Services, not elsewhere classified”.

    That means the government’s classification system thinks Uber competes with Microsoft, but not Lyft, and none of them are considered “transportation”.

    That’s unhelpful. But investors are smart and may not care if Uber sells software or services or comic books if the financials make sense.

    And here we hit a wall. When historical financial statements don’t show a path to profitability — as Uber’s absolutely don’t — investors need either reasonable projections of future profitability, or detailed historical operating metrics so they can make their own forecasts.

    Private investors demand and get these numbers from the companies they invest in, but when it comes to the public the answer is: “Sorry. Disclosure regulations and practices won’t have it”.

    Analysts would like to do what we do at my company Triton, which seeks to understand companies by identifying their key metrics and using them to build models to forecast their futures. Predicting Uber’s future revenue and profits is far from rocket science with the right metrics, but let’s have a look.

    Uber’s ride-sharing marketplace matches passengers to drivers by the millions. How many drivers have there been over time? Undisclosed.

    Uber operates a large meal-delivery business in addition to ride-sharing. What was the breakdown between passenger rides and restaurant deliveries? Undisclosed.

    Uber claims its future growth depends on driverless cars, freight shipments, and renting scooters and bikes. The key details of these new businesses? Undisclosed.

    What’s maddening is that we see evidence of relevant metrics embedded like shrapnel throughout the voluminous prose of Uber’s filing. It provides the number of drivers for only one period, the number of markets served for another, hints of ride-sharing trip values for others, but the data are not complete or comparable. It is not possible for potential investors to see trends over time and model them, as all of Uber’s existing big investors would surely have done.

    So why is this a problem for Uber now when it wasn’t for Microsoft?

    Both companies were 10 years old when they sought an IPO, with similar growth rates (revenues were rising 40 per cent year on year).

    However, Microsoft provided 4.5 years of financials in its prospectus showing healthy profits in every year, and a growing operating margin that had expanded to 33 per cent. By contrast Uber lost $3bn in 2018 and its losses appear to be growing.

    You didn’t need a model to see Microsoft’s path to profitability. It had already arrived.

    But now that tech companies like Uber seek to become huge before they (maybe) become profitable, IPO investors are in a bind. They have to rely on the prospectus to explain how the company is going to make money, and right now they are flying blind despite the many pages of platitudes and gobbledegook that Uber’s underwriters have provided.

    Even by the woeful recent standard of high page-counts and numbing words-to-numbers ratios, Uber’s prospectus stands out. But hey, if you’re trying to raise billions for popular but profitless companies on the most favourable terms, maybe these information restrictions aren’t so terrible. “I’d love to share those numbers but, you know, regulations. What can you do?” say the company and its underwriters.

    Don’t take this to mean that Uber’s proposition conclusively doesn’t make sense — smart investors who do have all the data have already put billions into the company. Then again, some of them are cashing out.

    Public investors large and small would certainly benefit if they could get their simple and reasonable questions answered before handing over the better part of $10bn. Uber grandly claims “our mission is to ignite opportunity by setting the world in motion”.

    The fuel to set capital in motion — in the right directions — is more and better information.

    The writer is co-founder and chief executive of Triton Research, which provides data and analysis to technology investors



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  3. #2
    When my company IPO'd back in the dotcom boom, USATODAY's business section headline read, "The Worst IPO in History"; but we were absolute patzers by today's standards for bad IPOs.

  4. #3
    If you can't dazzle them with brilliance, baffle them with bull $#@!.

    Congress generally uses more than 431 pages to disguise the fact that what they're passing is anything but brilliant.
    Last edited by acptulsa; 05-04-2019 at 11:20 AM.
    Quote Originally Posted by angelatc View Post
    There's not a liberty lover on the planet who isn't called a liberal by the right, and a con by the left.
    Quote Originally Posted by Swordsmyth View Post
    I don't really care if I happen to be wrong about your positions, you are wrong about mine.

  5. #4

    Uber ends below $45 IPO price, washing out in market debut

    https://finance.yahoo.com/news/uber-...135445721.html

    May 10, 2019

    Uber (UBER) officially began trading Friday on the New York Stock Exchange, but stumbled out of the gate as its stock settled below its $45 initial public offering price.

    In Uber’s first test of whether it can transition from Silicon Valley unicorn to a publicly traded company while winning over a skeptical, volatile market, the stock — which priced at $45 on Thursday — gradually drifted lower from the $46-$48 indicated range prior the open.

    In its first trade, Uber hit the market at $42 per share on the New York Stock Exchange (NYSE), effectively crashing out of the preferred range that it listed for its IPO. After a choppy session, Uber ended the day at $41.60, down nearly 8% from its listing price.

    ...

  6. #5
    For heaven's sakes - how can Uber be losing money? They are an app that charges overhead.
    *******

    I didn't start out thinking that anti-vax people were fools or impervious to reason, it's from my experience here that I now think that.
    - AmyPi 2014 (RIP)

    Anti-vaxxers, responsible for a 30 percent uptick in totally preventable diseases in the world, have blood on their hands. They shouldn't be considered civilized members of society. If they refuse to listen to a century of scientific studies confirming time and time again that vaccination is an unquestionable good for humanity, then it's time for us to start treating anti-vaxxers as what they are: dangerous and worthy of shame and condemnation. If we can't convince anti-vaxxers to change their minds, we must attach enough social stigma to the delusion that agnostics cease to join them.

  7. #6
    Quote Originally Posted by angelatc View Post
    For heaven's sakes - how can Uber be losing money? They are an app that charges overhead.
    I am glad I am not the only person who is confused. You have contract employees with no benefits who only get paid for driving who provide their own vehicles and don't work out of offices. Yet both Lyft and Uber puke money and there are real questions if they can survive long term.

    Also of note Uber has roughly the same total market value as Ford and GM combined, both of which make money. And as a completely random aside Tesla which has 1/8th the sales of Ford and loses money has the same market value as Ford.
    Last edited by Krugminator2; 05-10-2019 at 05:29 PM.

  8. #7
    Quote Originally Posted by Krugminator2 View Post
    I am glad I am not the only person who is confused. You have contract employees with no benefits who only get paid for driving who provide their own vehicles and don't work out of offices. Yet both Lyft and Uber puke money and there are real questions if they can survive long term.

    Also of note Uber has roughly the same total market value as Ford and GM combined, both of which make money. And as a completely random aside Tesla which has 1/8th the sales of Ford and loses money has the same market value as Ford.
    Pretty much of all of those companies Ford is the only one I would even consider owning and it would pretty much just be parking money with no real expectation of making any .
    Do something Danke

  9. #8
    they think it will replace car owners. Not going to happen...



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  11. #9
    Quote Originally Posted by kfarnan View Post
    they think it will replace car owners. Not going to happen...
    All they need to do is launder a $#@!load of money. $#@! profits.

    https://www.crunchbase.com/organization/uber

    Valuation at IPO $82.4B
    Money Raised at IPO $8.1B
    That's 900% profit for the investors.
    Last edited by timosman; 05-10-2019 at 09:09 PM.

  12. #10
    Quote Originally Posted by angelatc View Post
    For heaven's sakes - how can Uber be losing money? They are an app that charges overhead.
    Why Uber Is Losing Money



  13. #11
    Quote Originally Posted by timosman View Post
    Why Uber Is Losing Money


    "First, they have to pay drivers." - No, they don't. The customer pays the drivers. No customer, no money.

    "It's expensive to navigate the regulatory environment in each city and insure the business" - Ah, it's the non-producers sucking value off of the producers. OK, that I buy.

    "Credit card fees" - Square is cheap. The end.

    A lot of this sounds like a commercial for Lyft. "Lyft is friendlier...Lyft has a better reputation....Lyft invented tipping"

    "Putting money into Uber Freight, Air Taxi services, driverless cars" - ok, that sounds like a money drain. But I'd totally be on board with an Air Taxi service.

    I like their plan better than say, Pinterest's.

    ETA - Thanks for posting!
    *******

    I didn't start out thinking that anti-vax people were fools or impervious to reason, it's from my experience here that I now think that.
    - AmyPi 2014 (RIP)

    Anti-vaxxers, responsible for a 30 percent uptick in totally preventable diseases in the world, have blood on their hands. They shouldn't be considered civilized members of society. If they refuse to listen to a century of scientific studies confirming time and time again that vaccination is an unquestionable good for humanity, then it's time for us to start treating anti-vaxxers as what they are: dangerous and worthy of shame and condemnation. If we can't convince anti-vaxxers to change their minds, we must attach enough social stigma to the delusion that agnostics cease to join them.

  14. #12
    Quote Originally Posted by angelatc View Post
    For heaven's sakes - how can Uber be losing money? They are an app that charges overhead.
    If they are not making money they are not doing it right . I would not buy that at 42.00 , probably take a few at 2.00 .
    Do something Danke

  15. #13
    Agenda 2030 companies like Uber don't need no stinkin' disclosures. The money printer will ensure they stay afloat, whether operating private or public. They are social engineering companies and will not be allowed to fail. Now that it's public, has access to the ESF and your 401k, it's even easier to funnel money to keep it afloat.
    Last edited by devil21; 05-13-2019 at 01:18 AM.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

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    Outer Banks NC Fishing Boat Rentals

  16. #14

    Uber plunge again, closing 17% below its IPO price

    https://www.cnn.com/2019/05/13/investing/uber-stock

    May 13, 2019

    New York (CNN Business)Uber was already the biggest high-profile IPO bust in recent memory. And it only got worse on Monday.

    Shares of Uber (UBER) fell nearly 11% for the day following a dismal debut Friday. The stock is now down about 17% from its initial public offering price of $45.
    Uber is facing a lot of skepticism about its ability to make money anytime soon as it battles with rival Lyft (LYFT) for market share in the US.
    Lyft, which went public in March, has been a Wall Street dud too. That stock fell 6% Monday and is now down more than 33% from its IPO price.
    Uber and Lyft weren't helped by growing trade tension between the US and China either. The broader market fell sharply Monday morning after China responded to a US increase on tariffs for Chinese exports with higher tariffs of its own on US goods.
    Uber's epic drop is also bad news for some of the top investors who bought stakes in the company relatively late in the game.

    The company raised about $6.8 billion by selling nearly 140 million shares between December 2015 and February 2017 at a price of $48.77 a share, including a sale of about 71.8 million shares to Saudi Arabia's Public Investment Fund.
    That stake, worth $3.5 billion at the time, is now valued at around $2.7 billion.
    Japanese tech investing giant SoftBank is the largest investor in Uber. It owns nearly 13% of the company through its SoftBank Vision Fund. SoftBank's shares fell more than 3% in Tokyo Monday following Friday's drop in Uber's price.
    SoftBank also has investments in several other so-called unicorns that could be close to going public, including Slack, WeWork and DoorDash. Wall Street's sudden disdain for money-losing startups — Lyft has also fallen dramatically from its IPO price — could be bad news for SoftBank.
    And shares of Google owner Alphabet (GOOGL), which owns a 5% stake in Uber, closed down nearly 3% on Monday.


  17. #15
    It is not a real stock anyway . They do not produce anything . When it goes to zero like GM did there will not even be anything to liquidate to give creditors a little back towards losses.
    Do something Danke

  18. #16
    Quote Originally Posted by oyarde View Post
    It is not a real stock anyway . They do not produce anything . When it goes to zero like GM did there will not even be anything to liquidate to give creditors a little back towards losses.
    Look dude, we are laundering tens of billions of $s here. Why don't you shut your piehole while we are doing it? What's in it for you anyway? Why don't you hail a cab if you need to get somewhere and tell us how it goes?



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  20. #17
    Quote Originally Posted by timosman View Post
    Look dude, we are laundering tens of billions of $s here. Why don't you shut your piehole while we are doing it? What's in it for you anyway? Why don't you hail a cab if you need to get somewhere and tell us how it goes?
    They should get something going like amazon if they want to launder money , lol
    Do something Danke



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