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. Jun 10, 2014 uber is not in the taxi business, at least in the conventional sense, since it owns no cabs and has no cab drivers as employees. Mar 07, 2019 last week, lyft became the first of the ride sharing companies to filer an ipo. Uber pulls back on valuation with ipo pricing, companies.
For example, you might try, as the nyu finance professor aswath damodaran has, to model the company from the top down. My name is aswath damodaran and i teach corporate finance and valuation at the stern school of business at new york university. In my experience with uber, this was the case with all my drivers. For example, you might try, as the nyu finance professor aswath damodaran has, to model the company. When you have young companies like these its all mood. 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. These receipts are shared between uber and the car driver. Aswath damodaran, professor of finance at nyus stern school of business, discusses ubers valuation with bloombergs joe weisenthal, scarlet fu. But nyu stern professor aswath damodaran arrived at his own valuation thats roughly 40 percent lower.
In fact, uber versus lyft is a two i mean i call these multistory stocks, because in a sense, a story is driving the valuation. Nyu stern professor aswath damodaran one world media news. Jun 23, 2017 there is no clear pathway i can see for uber to go from a highrevenue growth company to a profitable company, says aswath damodaran, a professor of finance at the stern school of business. Uber is a company that is poised on a knifes edge, damodaran said in a. Uber will maintain its current model of keeping 20% of car service payments, even in the face of competition, because of its. I have uber and lyft on my phone and i never take a cab. What they have succeeded at is changing the way we use car service.
Instead, it plays the role of matchmaker, matching a driver car. Instead, it plays the role of matchmaker, matching a drivercar. If i was an investor in uber, i would be shit scared that margins havent improved, and we are no where near profitability. The market is a pricing game and not a value game, says nyus aswath damodaran. To get a sense of where uber stands now, just ahead of its ipo, i started with the. A guy in new york is an online magazine blog about good and affordable places to eat, living in nyc, and fun things to see and do in manhattan, by a guy who has lived in new york since 1968. This is the gross receipt from the customers who use uber for their transportation. 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. What does aswath damodaran have against warren buffett. There is absolutely no stickiness in the business, and they know it. This is the second in a series of three posts on the ride sharing business. A month later i felt even better about my piece when bill gurley, the legendary venture capitalist, wrote his own rebuttal of an uber skeptic.
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. Using the information in the prospectus, and telling a story about lyft as a us, transportation services company, i. Aswath damodarans most popular book is the little book of valuation. Last week, lyft became the first of the ride sharing companies to filer an ipo. To break down those daunting numbers, i focus on the per rider statistics to see the engines driving ubers growth over time. Connect your narrative to key drivers of value nyu stern. Sep 08, 2016 aswath damodaran, professor of finance at nyus stern school of business, discusses uber s valuation with bloombergs joe weisenthal, scarlet fu and matt miller on whatd you miss. Aswath damodaran has 34 books on goodreads with 12282 ratings.
The most recent years numbers include estimates for the last quarter of the year. The last time id written about aswath damodarans comments on ubers valuation, it was regarding his fight with uber investor bill gurley, and whether his valuation was actually newsworthy. Jul 17, 2014 aswath damodaran, professor of finance at the nyu stern school of business, gave a thorough explanation of why he thought uber was overpriced that set off a refreshingly civil back and forth between himself and uber board member bill gurley that rally highlights the different mindset of vc and value investors. For a contrary view, see this article by aswath damodaran, but his skepticism about investors bets on uber may reflect his failure to take account of ubers potential to displace all. When he thinks other forces are driving asset prices, he heads for the exits. Oct 10, 2015 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 mbas, executives and practitioners. Uber does not bring any new way of doing business, it has no unique moat and has a pretty imitable business model. Apr 15, 2019 the market is a pricing game and not a value game, says nyus aswath damodaran. Sep 22, 2014 first and foremost, they can set their own hours, meaning that uber can be a parttime job. Books by aswath damodaran author of the little book of. Uber is a company that is poised on a knifes edge, damodaran said in a blog post. Thats the basic problem i have with the ridesharing business not just lyft.
According to aswath damodaran, a professor who specializes in equity valuation at nyus stern school of business, uber is running up against the. Damodaran is a disciple of intrinsic value investing. Lyft is to uber as apples are to an entire produce store. Uber will maintain its current model of keeping 20% of car service. I teach corporate finance, valuation and investment philosophies at the stern school of business at new york university. Lyft overvalued here, according to the dean of valuation. If you are interested in a rigorous valuation, id suggest you read through aswath damodaran s excellent analysis. Lyft shares drop more than 10% to a new low as experts. Gurley was gentle in his takedown of nyu stern professor aswath damodaran, writing in the introduction. Uber is a company that is poised on a knifes edge, damodaran said.
Sep 08, 2016 and i think the answer is no for uber, if tomorrow, the game came to steady state. Jun 21, 2017 uber, when broken down by its unit economics, has no advantage over the traditional taxi business. It will maintain its current lowinfrastructure cost model, allowing it to earn high margins. The dispute was about the price of uber black, and the driver asserts that he is losing money due to all the.
For example, you might try, as the nyu finance professor aswath damodaran has. When you have young companies like these its all mood and momentum driving prices. But new york university professor of finance aswath damodaran pointed out in an august blog post that uber. 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 mbas, executives and practitioners. Aswath damodaran, they uber and the ride sharing companies collectively have disrupted this businessthats the good news, the bad news is i dont think theyve figured out a business model that can convert that growth into profits guest. New york uber driver ruling has major implications. I am a teacher first, who also happens to love untangling the puzzles of corporate finance and valuation, and writing about my experiences. 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. There is no clear pathway i can see for uber to go from a highrevenue growth company to a profitable company, says aswath damodaran, a professor of. Aswath damodaran, nyu stern school of business, says the company is overvalued. May 10, 2019 uber, as outlined in its ipo prospectus. To make uber even easier for the driver, uber x, launched in 2012, allowed driver to use his or her own personal car, rather than having to use an uber issued black car.
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. But clearly ridiculous, for example, to value a high street retailer on the same multiple as a purely online. Uber is not in the taxi business, at least in the conventional sense, since it owns no cabs and has no cab drivers as employees. Aswath damodaran holds the kerschner family chair in finance. Gurleys arguments, which focused on damodarans assumptions around. Plus drivers famously drive for multiple companies. Mar 02, 2017 the rise of the antiuber business model. Indeed, the taxi industry was decades ahead of uber in realizing the benefits of shifting operating costs and liabilities as far away from the profittaking organization as possible.
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