'Do you sell out now before you lose any more? Or should you hang on and hope they recover?' - ThursdayThoughts from BrettArends
The stock, which went public at $45, has since tumbled to a fresh low of $32.59. Total losses by outside investors, to date, total more than $2 billion.
A growing chorus on Wall Street have turned skeptical on the stock. Everywhere, experts are quick to highlight all the problems. Uber’s business model is uncertain, they say. Losses are ballooning. The company is young. Management is untested. The stock is overvalued. It’s unclear if it will ever make a profit. No wonder the IPO has been such a disaster, they’ll tell you. You should sell out now, they say.Trouble is, I wasn’t just quoting what Wall Street is saying about Uber.
When I went back and looked through the newspaper cuttings from the early days of other “game changing” and internet “platform” type companies, I found a lot of the same things being said about them that are being said now about Uber. The point is not that Wall Street doubters somehow predict future success, but that future successes are often hammered early on by grave, widespread doubts. Wall Street finds it very hard to value truly revolutionary companies. Analysts are good at taking current financials and extrapolating recent trends into the future. They cannot see around corners.
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