December 12, 2014

Uber has been valued at $40billion

Keeping in line with the theme of business valuation, the latest round of fund raising conducted by Uber has valued it at $40billion dollars.

Even when using either DCF or multiples method of valuation (or both), it is extremely difficult to put a finger on how such a massive figure has been placed on a company that is only 5 years old.

For one, it is almost impossible to use multiples given that Uber is a unique company. Who do you benchmark against?

Using DCF is not any easier. How do you project future cash flows for a company that is currently disrupting the transport industry in practically every market it enters? How do you factor in the risks associated with their service? Already we are seeing legal issues being raised in many countries.

Is it all hype or are we seeing the future unfold before our eyes? As a conservative investor, one will be happy to sit this one out. For risk-takers, this could be just the high risk- high reward play they have been waiting for.

Either way, we are living in exciting times. For those who say that everything has been invented, think again. Everyday is a new opportunity to learn, grow and change the world!

Link here to the original article from Fortune.