Uber filing for IPO

[SHDL]

Apparently Didi, which dominates the Chinese ride sharing market with something like a 90% market share, is still losing money:

 

https://www.wsj.com/articles/didi-dominates-ride-hailing-in-china-but-still-loses-money-on-each-trip-11556021083?mod=hp_lista_pos4

 

Some quotes from the article:

 

“This situation is not sustainable in the long run. Otherwise one day we wouldn’t be able to continue normal operations because we will have run out of funding,” [Mr. Chen] said. However, he added: “In the current reality, these losses are a normal phenomenon for all in the ride-hailing industry.”

 

Mr. Chen said Didi has been working to improve management efficiency from the end of last year. He referred to Didi’s plan to optimize workers and its move to cut back on operational spending. Didi plans to lay off about 2,000 employees this year.

 

So a near monopolist is struggling.  That says a lot about the industry.

 

 

[Liberty]

https://threadreaderapp.com/thread/1120539665512189957.html

[Spekulatius]

Anybody try to get some shares? It’s priced at the low end at $45 to make sure, the shares fly of the shelves. Should be good for an IPO pop, imo.

[ukvalueinvestment]

Anybody try to get some shares? It’s priced at the low end at $45 to make sure, the shares fly of the shelves. Should be good for an IPO pop, imo.

 

Is this Value Investing?

 

I can't see that Uber will ever be profitable.  The taxi business is one of the most political there is, full of vested interests in terms of taxi drivers and Unions, and the line that the drivers are "self employed" just won't fly with many politicians in Europe in particular.  Take London, for example, where Uber tried for a few years to bully the elected Mayor of a city of 9 million!

 

Also, I don't think the network effect and moat is as big as people think.  Take where I live - Cambridge, UK.  There is a local taxi company that has been in Cambridge forever, they don't tactically break local laws and they pay more than Uber.  Cambridge is a prosperous city, one where cab rides are occasional or for business people.  Cost isn't such a factor.  And the local company has an app, so I can call them just as easily as an Uber.

 

 

[writser]

Anybody try to get some shares? It’s priced at the low end at $45 to make sure, the shares fly of the shelves. Should be good for an IPO pop, imo.

 

Is this Value Investing?

 

Who cares if it is "Value Investing". Value investing is just a means to an end. I'd draw nice colored graphs and candlesticks all day long if that would make more money. The correct question is: is it profitable? And I wouldn't be surprised if subscribing to the Uber IPO and selling at the open is +EV.

 

FWIW has anybody ever tried this at IB? They do have an "IPO Subscriptions" page in account management but I've never actually seen an IPO there. Looks like the Uber IPO was available at TDAmeritrade. But I don't even know if it is possible for non-residents of the US to subscribe to IPO's at all actually. Something to look into maybe.

[ukvalueinvestment]

Anybody try to get some shares? It’s priced at the low end at $45 to make sure, the shares fly of the shelves. Should be good for an IPO pop, imo.

 

Is this Value Investing?

 

Who cares if it is "Value Investing". Value investing is just a means to an end. The correct question is: is it profitable? And I wouldn't be surprised if subscribing and selling at the open is +EV.

 

FWIW has anybody ever tried this at IB? They do have an "IPO Subscriptions" page in account management but I've never actually seen an IPO there. Looks like the Uber IPO was available at TDAmeritrade. But I don't even know if it is possible for non-residents of the US at all actually. Something to look into maybe.

 

I thought this was a forum for Value Investors where we meet and share ideas about companies trading below their intrinsic value.  It seems that is not the case for some people, who think of it as a forum for short term punting.

[Gregmal]

Some people look to find opportunities to make money in the markets. Others look to show off their "value investor" badge.

 

I consider my strategy to have a value approach, but take the first 100 times out of 100. Finding "value" is just as much about identifying mispricings or instances where there is a mathematical edge, as it is about buying some shitty business below intrinsic value and then waiting 5 years for it to do something.

 

I don't gamble. But I know someone who on occasion bets sports. They guy's logic is "this line makes zero sense"... and to my knowledge, the games he bets, which is probably just a handful a year, he nails. Not my cup of tea, but if one can make it work, that's great for them. To each their own. Same as merger plays. If you run it 100 times, and you come out net positive, you may be on to something..

 

Re: IPO's

 

Ive never seen or gotten notification at IB despite being signed up for a while. Would imagine if they do have availability it is for good reason, and not likely something worth getting into.

[writser]

I thought this was a forum for Value Investors where we meet and share ideas about companies trading below their intrinsic value.  It seems that is not the case for some people, who think of it as a forum for short term punting.

 

You sound like a Jehovah's Witness spreading the Value Investing word, with the caps and all. Such dogmatic thinking won't do you any good. I'd advise you to get off your high horse and leave this thread alone if you don't approve of our Ways.

[ukvalueinvestment]

I thought this was a forum for Value Investors where we meet and share ideas about companies trading below their intrinsic value.  It seems that is not the case for some people, who think of it as a forum for short term punting.

 

You sound like a Jehovah's Witness spreading the Value Investing word, with the caps and all. Such dogmatic thinking won't do you any good. I'd advise you to get off your high horse. And if you don't approve making money one way or another, how about you leave this thread alone instead of bitching about us being sinners?

 

I enjoy making money very much and approve of it.  Good luck with your strategy of getting long term wealthy, by speculatively participating in "hot ipos" at the top of a ten year bull market.  What could possibly go wrong :)

[Gregmal]

I thought this was a forum for Value Investors where we meet and share ideas about companies trading below their intrinsic value.  It seems that is not the case for some people, who think of it as a forum for short term punting.

 

You sound like a Jehovah's Witness spreading the Value Investing word, with the caps and all. Such dogmatic thinking won't do you any good. I'd advise you to get off your high horse. And if you don't approve making money one way or another, how about you leave this thread alone instead of bitching about us being sinners?

 

I enjoy making money very much and approve of it.  Good luck with your strategy of getting long term wealthy, by speculatively participating in "hot ipos" at the top of a ten year bull market.  What could possibly go wrong :)

 

Buying the IPO and selling at the open? What could go wrong? Probably very little. I mean even if this goes down immediately, lets say 10%... if capital is properly allocated, is that really such a big deal? Thats probably the worst case scenario and highly unlikely.

 

But the beauty of the market is that very soon we will see who is right and who is wrong, and if there really is so much to be scared of out there.

 

[writser]

 

I enjoy making money very much and approve of it.  Good luck with your strategy of getting long term wealthy, by speculatively participating in "hot ipos" at the top of a ten year bull market.  What could possibly go wrong :)

 

Lol, I read your blog every now and then and if I'm not mistaken you have posted an 1.5% annual return over the past six years, lagging your benchmark by 11.8% p.a. And you live in the UK, i.e. in dollar terms your portfolio is actually down over the past six years, despite allocating a significant percentage of your portfolio to US securities, and despite being more or less fully invested during six years of a huge bull market. Your journey to financial independence has been an absolute dumpster fire so far (e.g. riding a 15% position in Flybe down all the way to zero) - yet you wish us good luck getting long term wealthy? If you actually enjoy making money you should probably leave this forum, close down your blog, focus on your day job, pay off your mortgage, and put excess money in an index fund, instead of preaching here to others who are trying to have an rational discussion.

 

At the very least you could maybe act a little bit less pedantic and try to actually contribute something to this forum.

[SHDL]

To me, value investing is about making sure you pay less than what you expect to get back.  Now “what you get back” can mean different things based on your strategy.  If your plan is to get a few shares in the IPO and sell them as soon as the stock starts trading, then what you get back is the price at which the stock trades at the open.  On the other hand if you are going to hold the stock forever, then what you get back is the income stream you can extract from the business over time.  To me it looks like UBER could be “good value” from the former perspective but probably not from the latter.  I personally try to avoid getting involved in situations like that, but that doesn’t mean it’s a bad idea if you know what you’re doing.

 

[Gregmal]

To me, value investing is about making sure you pay less than what you expect to get back.  Now “what you get back” can mean different things based on your strategy.  If your plan is to get a few shares in the IPO and sell them as soon as the stock starts trading, then what you get back is the price at which the stock trades at the open.  On the other hand if you are going to hold the stock forever, then what you get back is the income stream you can extract from the business over time.  To me it looks like UBER could be “good value” from the former perspective but probably not from the latter.  I personally try to avoid getting involved in situations like that, but that doesn’t mean it’s a bad idea if you know what you’re doing.

 

Part of the key to the first part is who you do business with. Most people have no shot to get the IPOs you want. This is why taking the placement and selling at the open works. Typically the stuff you do have access to, speaking in terms of the normal retail investor, is the crap passed over by all the bigger boys, and stuff you dont want to touch. This strategy, unless you have an in, will purely come down to judgment calls.

[SHDL]

Yeah, to me the key strategic consideration here is that the people who set the IPO price seem highly motivated to get the stock price “pop” when it starts trading - even if that means accepting a lower IPO price.  And, as we all know, buying from a motivated seller tends to work well.

[Spekulatius]

Anybody try to get some shares? It’s priced at the low end at $45 to make sure, the shares fly of the shelves. Should be good for an IPO pop, imo.

 

Is this Value Investing?

 

Who cares if it is "Value Investing". Value investing is just a means to an end. I'd draw nice colored graphs and candlesticks all day long if that would make more money. The correct question is: is it profitable? And I wouldn't be surprised if subscribing to the Uber IPO and selling at the open is +EV.

 

FWIW has anybody ever tried this at IB? They do have an "IPO Subscriptions" page in account management but I've never actually seen an IPO there. Looks like the Uber IPO was available at TDAmeritrade. But I don't even know if it is possible for non-residents of the US to subscribe to IPO's at all actually. Something to look into maybe.

 

IB does not get access to most IPO’s. The only stock I recall that one could get there was IBKR. ;D

 

FWIW, buying UBER at IPO wouldn’t be value investing, but it is likely to make some money given what we know. I didn’t get an allocation from Fidelity, so I think there is decent demand. If they could just open UBER for trading. Maybe they wait until the market recovers. LOL.

[ukvalueinvestment]

 

I enjoy making money very much and approve of it.  Good luck with your strategy of getting long term wealthy, by speculatively participating in "hot ipos" at the top of a ten year bull market.  What could possibly go wrong :)

 

Lol, I read your blog every now and then and if I'm not mistaken you have posted an 1.5% annual return over the past six years, lagging your benchmark by 11.8% p.a. And you live in the UK, i.e. in dollar terms your portfolio is actually down over the past six years, despite allocating a significant percentage of your portfolio to US securities, and despite being more or less fully invested during six years of a huge bull market. Your journey to financial independence has been an absolute dumpster fire so far (e.g. riding a 15% position in Flybe down all the way to zero) - yet you wish us good luck getting long term wealthy? If you actually enjoy making money you should probably leave this forum, close down your blog, focus on your day job, pay off your mortgage, and put excess money in an index fund, instead of preaching here to others who are trying to have an rational discussion.

 

At the very least you could maybe act a little bit less pedantic and try to actually contribute something to this forum.

 

You've got me on my personal returns, they have been awful and that Flybe investment was pathetic in terms of process.  That said, I've had a great piece of luck in the last week with Lean Clean, which has helped recoup a good portion of those losses.  In addition, Leaf Clean was in my tax free ISA account, while Flybe was not.  That said, I totally agree, my investing has been very poor.  I've been too keen to buy value trips with optically low P/Es and have spent the last decade anticipating the next downturn. 

 

I still think my comparative record will look less awful after we've been through the US recession and stock market decline, which will come at some point.  However, that will be small consolation.

 

I still think that a visitor to a value investing form should not be reading about how to secure an IPO stock to benefit from a pop.  You wouldn't go to a motorbike website, and expect to read about cars, would you?

 

 

[writser]

I still think that a visitor to a value investing form should not be reading about how to secure an IPO stock to benefit from a pop.

 

My last post was maybe a bit rude - sorry for that. Still, you piss me off because you come here telling us in a pedantic way what we should and should not read and write. Yes - this is a value investing forum but this is the 'General Discussion' subsection and I think it is perfectly fine to discuss IPO speculation, sports betting, gambling, stamp collecting and whatever the hell else I want here. If Parsad disagrees he will let us know. I don't need you to come here to tell me what to do. If you don't like this thread just sod off.

 

Obviously participating in the UBER IPO would have been a horribly stupid idea, I can't believe anyone in their right mind would even consider doing that with UBER now trading at $42.8.

[Jurgis]

Obviously participating in the UBER IPO would have been a horribly stupid idea, I can't believe anyone in their right mind would even consider doing that with UBER now trading at $42.8.

 

"Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it." - Will Rogers.

[writser]

Yeah, to me the key strategic consideration here is that the people who set the IPO price seem highly motivated to get the stock price “pop” when it starts trading - even if that means accepting a lower IPO price.  And, as we all know, buying from a motivated seller tends to work well.

 

Exactly, in general the underwriters have a big incentive not to blow up the IPO because it is horrible for their reputation and for future business. In general I don't think it is a very bad strategy to participate in IPO's and sell on the open. And it's probably not possible for big players to do this too often because they'd lose access to deal flow. Could very well be that the market is not 100% efficient here.

 

The main risk is that the hot IPO's get oversubscribed, i.e. you subscribe for $100k and only get $10k worth of stock. But the few times that there is a turd you probably get a full allocation. So the risk/reward is a bit skewed. In some European countries there is a preferential treatment for retail investors, i.e. you won't get pro-rated on the first $5k you invest or whatever. That changes the equation substantially and I try to max out the preferential treatment in all of these as a hobby. Pretty sure that is +EV.

[SHDL]

The main risk is that the hot IPO's get oversubscribed, i.e. you subscribe for $100k and only get $10k worth of stock. But the few times that there is a turd you probably get a full allocation. So the risk/reward is a bit skewed. In some European countries there is a preferential treatment for retail investors, i.e. you won't get pro-rated on the first $5k you invest or whatever. That changes the equation substantially and I try to max out the preferential treatment in all of these as a hobby. Pretty sure that is +EV.

 

Very good point.

[hillfronter83]

Yeah, to me the key strategic consideration here is that the people who set the IPO price seem highly motivated to get the stock price “pop” when it starts trading - even if that means accepting a lower IPO price.  And, as we all know, buying from a motivated seller tends to work well.

 

Exactly, in general the underwriters have a big incentive not to blow up the IPO because it is horrible for their reputation and for future business. In general I don't think it is a very bad strategy to participate in IPO's and sell on the open. And it's probably not possible for big players to do this too often because they'd lose access to deal flow. Could very well be that the market is not 100% efficient here.

 

The main risk is that the hot IPO's get oversubscribed, i.e. you subscribe for $100k and only get $10k worth of stock. But the few times that there is a turd you probably get a full allocation. So the risk/reward is a bit skewed. In some European countries there is a preferential treatment for retail investors, i.e. you won't get pro-rated on the first $5k you invest or whatever. That changes the equation substantially and I try to max out the preferential treatment in all of these as a hobby. Pretty sure that is +EV.

 

Interesting. China A share has a lottery system since it's typical for price of IPO stocks to go up 50% after trading start. However, it's limited to Chinese investors, I believe.

[DTEJD1997]

Hey all:

 

I've said it before, and I'll say it again.  I think there is more likely than not, NO VIABLE business model for Uber.  They aren't currently making money, they aren't going to make money in the foreseeable future...meanwhile they've got BIGLY problems with their drivers.

 

Here in Detroit, there was a strike or work slow down the day before the IPO.  Local news casters were interviewing the agitated drivers, and they were universally complaining about the low pay.  They were also upset with the way that Uber treats them.  Lower wages over time, Uber keeping more of the revenue, not being responsive to operational problems, drivers perceiving their status as being mere cogs in the machine....and so on.

 

I think it is HIGHLY LIKELY that those people who want to drive for Uber are already doing so.  With all this negative publicity, what NEW people are going to consider being drivers for it?

 

Then add on a DOWN DAY on the IPO, and voila, you've got a dumpster fire all the way around!

 

Perhaps if Uber scaled back 90%, then maybe it would profitable and have viable business model?  For example, back when I had a job, I would drive from one side of Detroit to the other.  If I could find somebody who wanted to hitch a ride, that would have been great, even if I only got paid $5...$5 is better than nothing on a trip that is already being taken.  Perhaps that is the best path for Uber, sell unused capacity in existing vehicles taking trips?  People driving for Uber simply to make $$$, and as a job ain't going to cut it.

[Castanza]

Hey all:

 

I've said it before, and I'll say it again.  I think there is more likely than not, NO VIABLE business model for Uber.  They aren't currently making money, they aren't going to make money in the foreseeable future...meanwhile they've got BIGLY problems with their drivers.

 

Here in Detroit, there was a strike or work slow down the day before the IPO.  Local news casters were interviewing the agitated drivers, and they were universally complaining about the low pay.  They were also upset with the way that Uber treats them.  Lower wages over time, Uber keeping more of the revenue, not being responsive to operational problems, drivers perceiving their status as being mere cogs in the machine....and so on.

 

I think it is HIGHLY LIKELY that those people who want to drive for Uber are already doing so.  With all this negative publicity, what NEW people are going to consider being drivers for it?

 

Then add on a DOWN DAY on the IPO, and voila, you've got a dumpster fire all the way around!

 

Perhaps if Uber scaled back 90%, then maybe it would profitable and have viable business model?  For example, back when I had a job, I would drive from one side of Detroit to the other.  If I could find somebody who wanted to hitch a ride, that would have been great, even if I only got paid $5...$5 is better than nothing on a trip that is already being taken.  Perhaps that is the best path for Uber, sell unused capacity in existing vehicles taking trips?  People driving for Uber simply to make $$$, and as a job ain't going to cut it.

 

I don't understand these drivers complaining about money. I mean, I have never seen Uber advertised as a full-time job. Commercials always show it as additional income when you have a few hours to spare. I drove for them while in college and some nights when my wife worked 3rd shift as a nurse. I was quite happy to have some "beer" money in college. If anything these people should be thankful Uber exists. It facilitates everything for them and gives them a platform to make some extra income. Nobody is forcing them to drive for Uber and they could go out and start their own private taxi service if they really wanted (my neighbor used to do with for a local Judge...made out pretty good). Society needs to stop trying to push these supplemental income jobs as careers. Bagging groceries, flipping burgers and driving for Uber isn't a career. We need to hold firm to this conviction, because out of necessity comes change. People will learn this and adapt if needed.

 

Fun fact: also paid for the entirety of my honeymoon by donating plasma in college. But that's a story for another time. 

[SHDL]

A look into how well the early investors have done (or should I say, will have done assuming the current valuation holds up):

 

https://www.wsj.com/articles/uber-jackpot-inside-one-of-the-greatest-startup-investments-of-all-time-11557496421?mod=hp_major_pos16

[Spekulatius]

Hey all:

 

I've said it before, and I'll say it again.  I think there is more likely than not, NO VIABLE business model for Uber.  They aren't currently making money, they aren't going to make money in the foreseeable future...meanwhile they've got BIGLY problems with their drivers.

 

Here in Detroit, there was a strike or work slow down the day before the IPO.  Local news casters were interviewing the agitated drivers, and they were universally complaining about the low pay.  They were also upset with the way that Uber treats them.  Lower wages over time, Uber keeping more of the revenue, not being responsive to operational problems, drivers perceiving their status as being mere cogs in the machine....and so on.

 

I think it is HIGHLY LIKELY that those people who want to drive for Uber are already doing so.  With all this negative publicity, what NEW people are going to consider being drivers for it?

 

Then add on a DOWN DAY on the IPO, and voila, you've got a dumpster fire all the way around!

 

Perhaps if Uber scaled back 90%, then maybe it would profitable and have viable business model?  For example, back when I had a job, I would drive from one side of Detroit to the other.  If I could find somebody who wanted to hitch a ride, that would have been great, even if I only got paid $5...$5 is better than nothing on a trip that is already being taken.  Perhaps that is the best path for Uber, sell unused capacity in existing vehicles taking trips?  People driving for Uber simply to make $$$, and as a job ain't going to cut it.

 

I don't understand these drivers complaining about money. I mean, I have never seen Uber advertised as a full-time job. Commercials always show it as additional income when you have a few hours to spare. I drove for them while in college and some nights when my wife worked 3rd shift as a nurse. I was quite happy to have some "beer" money in college. If anything these people should be thankful Uber exists. It facilitates everything for them and gives them a platform to make some extra income. Nobody is forcing them to drive for Uber and they could go out and start their own private taxi service if they really wanted (my neighbor used to do with for a local Judge...made out pretty good). Society needs to stop trying to push these supplemental income jobs as careers. Bagging groceries, flipping burgers and driving for Uber isn't a career. We need to hold firm to this conviction, because out of necessity comes change. People will learn this and adapt if needed.

 

Fun fact: also paid for the entirety of my honeymoon by donating plasma in college. But that's a story for another time.

 

I agree, it makes no sense to take an on demand job with a contractor and then demand benefits. It’s also off base, because Uber right now loses money, so one could make the argument they it subsidizes the riders , but also the drivers.  If some has a reason to complain, it would be taxi drivers since they get more unregulated competition.