Maybe it’s true that there’s no such thing as bad publicity. In the last year, Uber has made news for allegations of sexual harassment and stealing trade secrets. Then it pushed its founder out of the business.
For most companies, that kind of news would damage the corporate name. If the company were publically listed, its stock price would fall. Uber is determined to bend reality.
It’s not listed yet, but it’s coming to Wall Street soon and at least one bank evaluating the company says its worth $120 billion in an initial public offering. That figure is higher than the total market cap for General Motors, Ford, and Fiat-Chrysler added together.
Is the ride-hailing business really that much better than making cars? Uber doesn’t expect to see a profit for another three years but expects $10 billion to $11 billion in revenues this year.
Any number cruncher can see the issue immediately. Auto company valuations are a fraction of annual revenues. This Uber must be loaded with pot—or the bankers are—to envision a market cap of more than 10X revenues. Only drugs and pot stocks carry price to sales ratios nearing that territory. The US market overall values around 1.8 X sales.
But there’s no great mystery why Uber would choose to list its stock, apart from the possibility of being overpaid. Of course, it needs capital to grow. And of course, an NYSE or Nasdaq listing is good for prestige. But the real impetus comes from Sofbank.
