The recently published financial details of Uber that projects $100 billion valuation for its IPO has left analyzed divided and all of them agree that this valuation cannot be guaranteed as accessing it is not easy. Analyst Dan Ives of Wedbush Securities when questioned about the possibility of $100 billion valuation of Uber stated that everything lies in the beholder’s eyes and it could be what investors are likely to pay. Paul Meeks of Wireless Fund stated that as there are no previous profit benchmarks of the firm so the best way to access its valuation is through its sales figures.
He said that pricing its stock six times above sales value is a healthy valuation for an established technical brand like Uber so its value should be around $73 billion and that of Lyft should be $14 billion with estimated shares at $ 50 per share. He said that though there is nothing wrong for a firm that is making losses to go public for funding its expansion plans but the growing losses of Uber are a cause for worry. During 2018 the EBIT adjusted losses of Uber stood at $1.8 billion and its revenues also stopped growing which raised investors’ concerns.
The fear among investors about Uber’s progress is compounded by the sharp fall of Lyft’s stocks that sank from $ 72 its IPO price to $59.90 late this week. Both analysts have connected the uncertainty around IPO of Uber to debut of Amazon which also suffered from steep losses. Ives said that though some investors feel that the stock of Uber has same potential as Amazon comparing them is a little foolish as profitability path of Uber is still fuzzy. Meeks seeks limited opportunity for Uber to make profits out of its core business of ridesharing like Amazon which made money from its cloud product.