Does Uber's Valuation Make Sense?

According to a recent Bloomberg report, privately held Uber is seeking an additional $1 billion in funding at a $10 billion valuation. Only two other pre-IPO enterprises merit that sort of price tag at the moment: Airbnb and Dropbox. In the following video, Fool contributor Tim Beyers explains why Uber may still be worth the price.

Tim says all signs point to Uber dismantling the existing car service infrastructure. For example, the company's smartphone-based platform eliminates the need for dispatchers and passenger haggling, inserting precision into a system historically plagued by ambiguity. That's made  some uncomfortable: A 10,000-cab protest is scheduled to take place in London next month.

Uber has also endured regulatory hurdles and bad press for its "surge pricing" model, yet, in spite of this, has grown to offer service in 115 cities worldwide. Why is Uber succeeding? Drivers seem to like it, including the two Uber X drivers Tim hired during a trip to New York City earlier the year. A growing list of imitators (i.e., Lyft, Sidecar) further suggests Uber has the makings of a classic Rule Breaker.

Or at least that seems to be the verdict of early-stage investors. Google (NASDAQ: GOOGL  ) (NASDAQ: GOOG  ) invested $258 million in Uber last year via its Google Ventures subsidiary. A new billion-dollar funding round could see one or more investors matching Google's commitment, Tim says.

Now it's your turn to weigh in. Do you believe Uber merits a $10 billion pre-IPO valuation? Why or why not? Please watch the video to get the full story and then leave a comment to let us know your take on Uber, including whether you'd buy stock at IPO.

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