<story><title>Uber Sets Valuation Record of $17B in New Funding</title><url>http://www.bloomberg.com/news/2014-06-06/uber-sets-valuation-record-of-17-billion-in-new-funding.html</url></story><parent_chain><item><author>quaunaut</author><text>Prepending Edit: If you&amp;#x27;re reading this and have a lot more familiarity in how investments of this kind are made, and what kinds of things these investors are thinking, I really am making this post looking for education. I didn&amp;#x27;t finish college, and don&amp;#x27;t know a lot, but I&amp;#x27;m trying. If you&amp;#x27;d rather not stir the pot by talking here, my e-mail is in my profile.&lt;p&gt;The one thing that makes me skeptical about this, is historical data. From what I&amp;#x27;m seeing, the &lt;i&gt;entire&lt;/i&gt; US Taxi&amp;#x2F;Limo market is $11bn in value. So for them to achieve this, they&amp;#x27;d need ~80%+ market share in the US, plus a high market share in both Europe and Asia. This is a valuation that smells similar to the WhatsApp deal, where the timeline to succeeding this valuation is 15-20 years out.&lt;p&gt;Is there some data I&amp;#x27;m missing here that implies my data(from [1] for example) is flawed? Or that maybe this isn&amp;#x27;t such an out-there valuation, by way of possible growth from ridesharing, or other avenues Uber could explore without straying too far from their primary purpose?&lt;p&gt;&lt;a href=&quot;http://www.ibisworld.com/industry/default.aspx?indid=1951&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;www.ibisworld.com&amp;#x2F;industry&amp;#x2F;default.aspx?indid=1951&lt;/a&gt;</text></item></parent_chain><comment><author>runako</author><text>A couple of points, without having closely looked at the Uber financing:&lt;p&gt;1) $11B is the estimate of the revenues of the &lt;i&gt;US&lt;/i&gt; taxi &amp;amp; limo market. Uber aims to expand the size of that market, by drawing in people who otherwise would not have taken a taxi or limo.&lt;p&gt;2) Uber is global today, and can expand much faster than traditional T&amp;amp;L companies given its model. Global taxi &amp;amp; limo revenues are certainly higher than $11B.&lt;p&gt;3) Using $11B as the estimate of the US taxi &amp;amp; limo revenues, it is reasonable to assume that the market value of all US taxi &amp;amp; limo companies is larger than $11B. This assumption rests on the premise that if one owned all US taxi &amp;amp; limo services, one could generate ~$11B in cash annually. I don&amp;#x27;t know what revenue multiple is typical in this industry, but I&amp;#x27;d be somewhat surprised to learn that it&amp;#x27;s &amp;lt;= 1. (Not to mention the monopoly licenses, brands, customer relationships, autos and other physical plant etc. that comes from owning these assets.)</text></comment>
<story><title>Uber Sets Valuation Record of $17B in New Funding</title><url>http://www.bloomberg.com/news/2014-06-06/uber-sets-valuation-record-of-17-billion-in-new-funding.html</url></story><parent_chain><item><author>quaunaut</author><text>Prepending Edit: If you&amp;#x27;re reading this and have a lot more familiarity in how investments of this kind are made, and what kinds of things these investors are thinking, I really am making this post looking for education. I didn&amp;#x27;t finish college, and don&amp;#x27;t know a lot, but I&amp;#x27;m trying. If you&amp;#x27;d rather not stir the pot by talking here, my e-mail is in my profile.&lt;p&gt;The one thing that makes me skeptical about this, is historical data. From what I&amp;#x27;m seeing, the &lt;i&gt;entire&lt;/i&gt; US Taxi&amp;#x2F;Limo market is $11bn in value. So for them to achieve this, they&amp;#x27;d need ~80%+ market share in the US, plus a high market share in both Europe and Asia. This is a valuation that smells similar to the WhatsApp deal, where the timeline to succeeding this valuation is 15-20 years out.&lt;p&gt;Is there some data I&amp;#x27;m missing here that implies my data(from [1] for example) is flawed? Or that maybe this isn&amp;#x27;t such an out-there valuation, by way of possible growth from ridesharing, or other avenues Uber could explore without straying too far from their primary purpose?&lt;p&gt;&lt;a href=&quot;http://www.ibisworld.com/industry/default.aspx?indid=1951&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;www.ibisworld.com&amp;#x2F;industry&amp;#x2F;default.aspx?indid=1951&lt;/a&gt;</text></item></parent_chain><comment><author>fnbr</author><text>Assuming your figures are correct, $11bn in annual revenue allows for a much higher valuation than $17bn. One of the main methods of valuing a company is the &amp;quot;multiples&amp;quot; approach [1], which values the company at a multiple of it&amp;#x27;s annual revenue, with the multiple typically falling between 5-15.&lt;p&gt;A commonly used multiple is the price to earnings multiple of the entire industry, which is absurdly high for major tech companies- Google, for example, has a P&amp;#x2F;E ratio of ~30 [2], and Facebook has a P&amp;#x2F;E ratio of ~80 [3]. For non-tech companies, the average ratio is roughly 15.&lt;p&gt;So if we want to use the average P&amp;#x2F;E ratio, we can say that a very very very rough price for the entire Taxi&amp;#x2F;Limo market is $150bn.&lt;p&gt;[1] &lt;a href=&quot;http://en.wikipedia.org/wiki/Valuation_using_multiples&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;en.wikipedia.org&amp;#x2F;wiki&amp;#x2F;Valuation_using_multiples&lt;/a&gt; 
[2] &lt;a href=&quot;http://ycharts.com/companies/GOOG/pe_ratio&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;ycharts.com&amp;#x2F;companies&amp;#x2F;GOOG&amp;#x2F;pe_ratio&lt;/a&gt;
[3] &lt;a href=&quot;http://ycharts.com/companies/FB/pe_ratio&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;ycharts.com&amp;#x2F;companies&amp;#x2F;FB&amp;#x2F;pe_ratio&lt;/a&gt;</text></comment>