On Tuesday, host Chris Hill and Motley Fool Funds Analyst Bill Mann answer a tweet sent to them by Liam McCusker, asking about the value of Uber. McCusker asked, "Is Uber really worth $17 billion?"
Chris explained that the latest valuations indicate Uber might be worth even more -- CNBC and New York Times analyst Robert Sorkin believes that Uber may be undervalued at $18 billion. For the German buffs, Bill believes that Uber is worth uder $18 billion. As a private company, Bill notes that Uber's financial structure is still a mystery, but he concedes that $200 million in revenue last year is impressive. Yet, comparing $200 million and $18 billion just doesn't compute for Bill. For the company to actually be valued at $18 billion, Bill thinks it would be a miracle ... which means it's still possible.
Bill thinks that Uber has proven itself as a taxi company or a car-services platform, but not much more. When viewing the company, an investor needs to focus on what the company has achieved and explore all the other possibilities of what Uber wants to do as a call option. Furthermore, it's impossible for a CEO to understand the difficulties and pressures in taking a private company public, and Bill believes that it takes a strong type of CEO to push back on that pressure. Uber's CEO has yet to be tried. Chris parallels the move to becoming a new parent, because no matter how many books you read, the reality is far different than what you expected.
And that's just part of the reason Fool Funds doesn't participate in IPOs, Bill said. In response to why analysts are giving the company the benefit of the doubt, Bill explored how the benefits are an inefficient use of the capital.
In the end, Bill thinks that everyone is getting far too excited about Uber -- if investors look at more than just the possibilities and also examine the risks, Uber is still up in the air.
Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.