I believe the current valuation of Uber is absurdly high. I cannot think of any potential acquirers for Uber at anything approaching the current valuation. As a result, I believe that Uber’s valuation will suffer a collapse in the next 5 years, possibly causing the company’s insolvency. Based on the large number of debt financing rounds, I would not invest in Uber common stock at any price.
Uber is terribly positioned to deal with the changes associated with robotic cars. Google, Ford, GM, and Apple are all better positioned to offer ride-sharing associated with robotic cars than Uber is. Despite their efforts to hire top researchers, Uber cannot offer competitive compensation packages at its current valuation, and is forced to do ludicrous acqui-hire schemes to get talent.
The company’s management is immoral. In 2014, Peter Thiel called it the “most ethically challenged company in Silicon Valley”. The aggressive limitations on employees selling their equity and the company’s refusal to report its financials publicly is, in my opinion, unconscionable. The company faces significant legal risks in every market that it operates.
The company’s robotic use of the 5-star rating system is both unethical and ineffective at providing a good ridership experience. I believe a significant number of top employees and top driver-partners will leave within the next 2 years, regardless of any attempts the company may make to prevent it.
The company’s business model is only functioning as a result of offering car rides below cost, and Uber will instantly face severe competition once it can’t issue more billion-dollar funding rounds to subsidize ridership. The app’s technology is almost a commodity at this point, and the barriers to entry are low for any individual geographic market.
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