On April 11, Uber Technologies, America’s largest ride-hailing company by number of active users, released its IPO prospectus in an effort to go public. In the coming months, the company seeks to be listed on the NYSE (SPY) (QQQ).
At the end of 2018, Uber had nearly 91 million active users on its platform, while its smaller rival Lyft (LYFT) had only ~18.6 million. This huge difference between the companies’ active user numbers justifies reports that Uber is seeking a valuation of $90 billion–$100 billion, much higher than Lyft’s valuation of $24.3 billion in its IPO.
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Why Warren Buffett won’t invest
In March 2018, while talking with CNBC at The Gatehouse’s event in Texas, legendary investor and Berkshire Hathaway’s chair and CEO, Warren Buffett, gave his opinion on investing in IPOs.
While referring to Lyft’s IPO, Buffett said that he “certainly wouldn’t buy a business for 25 billion” and that before investing in a business, he tries to figure out what he’s “getting as a part owner of a business.”
He added, “With all the things you can buy for 25 billion in this world, that you would pick a business that really has to be earning two and a half or three billion pretax in five years to even be on the same radar screen as things you can buy right now…I have never been a big buyer [of IPOs].” Buffett then revealed that he hadn’t bought an IPO in over six decades.
In another interview with CNBC in 2018, Buffett called himself a great admirer of Uber’s CEO, Dara Khosrowshahi. Nonetheless, the recent views he’s expressed on investing in IPOs suggest that he won’t be investing in Uber’s.