Same forces will affect how much of the taxi receipts accrue to uber. Uber is entitled to its opinions but not to the facts, aswath damodaran, a professor at nyus stern school of business and longtime uber skeptic, said in an email, when asked whether the. I did a series of three posts on the ride sharing business about a year ago, starting with a valuation of uber, moving on to an assessment of lyft, continuing with a global comparison of ride sharing companies and ending with a discussion of the future of the ride sharing business. The linked analysis is very interesting as a read and gives much food for thought, but the writer is basically implying that both uber and its industry have a 100% chance of being incredibly successful. The last time id written about aswath damodaran s comments on uber s valuation, it was regarding his fight with uber investor bill gurley, and whether his valuation was actually newsworthy now, his latest valuation of uber, which he concludes is worth about usd 28 billion, has once again caught the attention of mainstream media, with mint writing an editorial about it. Nyu stern professor aswath damodaran one world media.
Dec 07, 2014 today i was reading aswath damodarans blog post crowd valuation of uber. Next, the two get into professor damodarans work and his framework for thinking about valuation. The value of a user increases with user stickiness and loyalty captured in the expected lifetime of a user and the annual renewal rate. He has been called wall streets dean of valuation, and is widely respected as one of the. Jun 21, 2017 uber just cannot seem to help itself, finding a way to get in the news, and often in ways that leave its image in tatters. Tech companies dont have long mature periods, where. To the extent that taxi drivers may be able to play uber off against lyft and hailo, this number will come under downward pressure. One of ubers selling points lies in its nonaccounting numbers, as the company reported having 91 million monthly riders defined as riders who used either uber or uber delivery at least once in a month and completing 5. He covers the craft of valuation, and how his framework evolves over time. Ubers real value could be much lower than the price it goes public. Aug 17, 2016 according to aswath damodaran, a professor who specializes in equity valuation at nyus stern school of business, uber is running up against the roadblock that has thwarted many upstart businesses. First, you come up with a number for the value of the total transportation. I first valued uber in june of 2014, and got it horribly wrong.
Uber is a company that is poised on a knifes edge, damodaran said in a blog post. Uber business model and sum of parts valuation attempt value. Second, uber could increase its take of the cab receipts. Aswath damodaran, a finance professor who blogs about uber.
He has been called wall streets dean of valuation, and is widely respected as one of the foremost experts on corporate valuation. Discounted cash flow valuation of uber october 2017. I am a teacher first, who also happens to love untangling the puzzles of corporate finance and valuation, and writing about my experiences. If uber has drivers in a certain area, a competitor might be able to. Aswath damodaran is the kerschner chaired professor of finance at the stern school of business at new york university, teaching corporate finance and valuation to. Aswath damodaran, nyu stern school of business, says the company is overvalued. In his blog post, he has invited his readers to give their opinion on ubers valuation. Avoiding bias in dcf analysis miller value partners. Third, the total market for cabs may be much larger than what you estimated. Uber board member bill gurley defends the car startups valuation. Damodaran has published several books on equity valuation and corporate finance.
May 10, 2019 for this special friday episode, we welcome nyu professor and valuation expert, aswath damodaran. As someone who has valued uber with the tidbits of information that have hitherto been available. In the week since i posted my uber valuation, i have received many suggestions on what i should have done differently in the valuation, with many of you arguing that i was being a over optimistic in my forecasts of total market, market share and margin improvements and some of you positing that i was too pessimistic. Uber is a company that is poised on a knifes edge, damodaran said. Uber s real value could be much lower than the price it goes public for, according to one expert.
Make small revenues into big revenues my estimate for 2023. Uber likely isnt the worlds most valuable startup after. These receipts are shared between uber and the car driver. My name is aswath damodaran and i teach corporate finance and valuation at the stern school of business at new york university.
The value of a user is directly proportional to the profitability of that user captured as the difference between the revenues from that user and the cost of servicing that user. Uber is a company that is poised on a knifes edge, damodaran said in a. Basically, gurley made the point that damodaran was wrong in valuing uber as a carservices company, when in fact, it was a logistics and delivery company. Jun 24, 2019 here in the uk, we often see journalists just multiplying a companys ebitda by 10x to get the valuation of a company. But clearly ridiculous, for example, to value a high street retailer on the same multiple as a purely online. Lyft overvalued here, according to the dean of valuation, aswath damodaran duration. He remembers how an email from bill gurley, who was on uber s board of directors, vastly changed his story about uber and caused him to sharply revise his valuation upwards. Opinion aswath damodaran how do you value a company. Uber bill gurley uber bill gurley modified uber damodaran narrative. For this special friday episode, we welcome nyu professor and valuation expert, aswath damodaran. I posted my first valuation of uber in june 2014, viewing it as an urban car service. Next, the two get into professor damodaran s work and his framework for thinking about valuation. Following post gives an overview of my valuation of uber. Aswaths text book on investment valuation is a must have for any person seriously thinking of learning investment valuation.
If it just continues to just add to its rider count, but pushes up its cost of acquiring riders as it goes along, and existing riders do not. In my first, published in both techcrunch and my blog, i valued uber, trying to incorporate the news that has come out about the company and its competition in the last year. This is an online valuation class that aims to compress what i do in a regular valuation class into bite size pieces about 1220 minutes apiece. Uber pulls back on valuation with ipo pricing fin24. The business model that i assumed for my initial uber valuation relied on minimal. Uber also spent money to set up a research and development division, uber atg, that is working on everything from self. Uber sells stake to softbank, valuing ridehailing giant. Aug 23, 2016 the last time id written about aswath damodaran s comments on uber s valuation, it was regarding his fight with uber investor bill gurley, and whether his valuation was actually newsworthy. The bad news on the car service market front has come mostly in the form of taxi driver. I dont claim to have any certitude about these numbers but the spreadsheet. According to aswath damodaran, a professor who specializes in equity valuation at nyus stern school of business, uber is running up against the.
Damodaran, known as wall streets dean of valuation, argues that while uber, just like its number one rival lyft, has attempted to market itself as a. Jul 17, 2018 professor aswath damodaran is currently a professor of finance at nyus stern school of business. I describe myself as a teacher first, who also happens to love untangling the puzzles of corporate finance and valuation, and writing about my experiences. Courts further affirmed the decision, ruling that uber drivers could. Uber will expand the car service market substantially, bringing in mass transit. But nyu stern professor aswath damodaran arrived at his own.
Lyft overvalued here, according to the dean of valuation. Using the information in the prospectus, and telling a story about lyft as a us, transportation services company, i. Professor aswath damodaran is currently a professor of finance at nyus stern school of business. May 09, 2019 uber is a game of pricing, not valuation, says nyus segram. In the second post, i value lyft, the other ride sharing company, and also look at how ride sharing companies globally are being priced. Apr 15, 2019 the market is a pricing game and not a value game, says nyus aswath damodaran. Lyft shares drop more than 10% to a new low as experts. At least lyft is focused, and not committed to expensive, risky side projects like uber, damodaran noted.
Uber ceo dara khosrowshahi on earnings, assisting drivers during. As it is uber ipo day, meb and professor damodaran start with a discussion about uber and ride sharing valuations. Every stockmarket bet is a prediction, but ubers vision of the future is. Uber can create new demands for car service in parts of the country where taxis are not used suburbia, small towns. Personal mobility revolution or car service overreach. Uber is a game of pricing, not valuation, says nyus.
For example, you might try, as the nyu finance professor aswath damodaran has. Aswath damodaran, nyu professor of finance, joins squawk on the street ahead of uber s ipo to discuss whether the company can reach the valuation the market is expecting. Revenue and profit would skyrocket without pesky drivers. Uber just cannot seem to help itself, finding a way to get in the news, and often in ways that leave its image in tatters. If you want a book to accompany this class, try one of my valuation books i have four. When you have young companies like these its all mood and momentum driving prices. The market is a pricing game and not a value game, says nyus aswath damodaran.
Damodaran s valuation still seems more reasonable to me. Uber is a company that is poised on a knifes edge, damodaran. I posted my first valuation of uber in june 2014, viewing it as an urban car service, with local but not global networking benefits. Aswath damodaran of nyu talks about tesla shares on squawk alley. Valuation guru says uber is worth a little more than half. The business model that i assumed for my initial uber valuation relied on. For example, you might try, as the nyu finance professor aswath damodaran has, to model the company from the top down. If uber cannot deliver profits over time, it spells real trouble for the gig economy, said aswath damodaran, a professor at new york universitys stern school of business. You could see this pattern in full display last week, where travis kalanick, its founder and ceo took a leave of absence to reinvent himself as travis 2. Investment valuation, damodaran on valuation, the dark side of valuation and the little book on valuation less. Uber sells stake to softbank, valuing ridehailing giant at. Last week, lyft became the first of the ride sharing companies to filer an ipo. In many us cities, lyft is already offering drivers the opportunity to keep all of their.
Aswath damodaran born 23 september 1957, sometimes known as the dean of valuation, is a professor of finance at the stern school of business at new york university kerschner family chair in finance education, where he teaches corporate finance and equity valuation. Uber investor bill gurley defends valuation business insider. Uber is a game of pricing, not valuation, says nyus segram. As a result, i happen to be at the intersection of three businesses, education. By linking with technology and credit card companies, uber can have global networking benefits. Uber pulls back on valuation with ipo pricing, companies. Apr 10, 2019 aswath damodaran, nyu stern school of business, says the company is overvalued. Connect your narrative to key drivers of value nyu stern. The equity risk premiums that i have used in the valuations that follow.
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