[georgeecollins]

I don't know what to say about this because as a lifelong value investor I cannot accept the valuation of Uber based on it's earnings. But the same logic held me back from investing in Facebook and Google, which did not make any sense to me at the moment of their IPO. How do I decide what Uber's earnings will be in five years?

[btilly]

Warren Buffett's advice on this is simple. If he doesn't understand it, he doesn't invest. No matter what the rest of the world thinks.

He famously missed the dot com boom. And in the middle of it, gave a private speech about exactly why, about how few of those companies were likely to be around in a few years even if the internet were exactly as successful as hoped for.

He was widely derided as being behind the times, out of date, and so on for a couple of years. But looking back now, he looks prescient.

If you are a value investor and don't understand how to value it, don't invest.

[bunderbunder]

And it's not like he just flat out didn't invest all the money he wasn't putting into Geocities and Lycos. He was just putting it into other things, mostly stuff that was less the hot new thing, and therefore less in demand, and therefore more favorably priced.

I don't think he regrets his conservatism. From 1990 through now, BRK.A is up 4,200%, while the NASDAQ composite is up only 1,500%.

[btilly]

No, he doesn't.

But as https://alphaarchitect.com/2016/10/10/value-investing-got-cr... points out, it looked rather different when Berkshire lost 44% while the NASDAQ gained 145%. Buffett stood by the strength of his reasoning. But the rest of the world didn't.

[mlthoughts2018]

Until some years later when it did...

[solatic]

The way to reconcile this is to compare it to poker - the way to gauge your performance is not by the final outcomes, but by how good your decisions were. Worrying about missing the boat on exceptional investments like Facebook and Google is irrational if your overall investment strategy is sound. It's just not worth it to second-guess yourself for folding pre-flop if your hand only turned into a winner on the river.

[amoitnga]

I'm not an investor, no experience, just want to voice my 2c.

- facebook and google sure, but how many are there of those who didn't make it?

- sounds like a fear of missing out.

- Buffet didn't invest in Microsoft because he didn't "get it". His idea, I believe, is: "it's ok to pass on investments". He's looking for "sure things".

Personally, I think the entire thing is ridiculous. 120B ? for what? 2 of my friends are uber drivers and hate every second of it, that's worth that kind of money? or the fact that they have an app. What do they have?

Market share? As soon as somebody gives me the same or slightly less price, I'll push a button on that app instead. Why didn't they go public for so long? Are they trying to rescue their investments now? I don't know. Don't care.

It's not the type of product I would miss. it's just a taxi.

[computerex]

Don't forget that Uber is in the autonomous driving business. They burnt through cash to get market share, because when self driving becomes a thing, they'll have a huge swing in margins/profits as self driving will get rid of their greatest expense (human drivers).

[bunderbunder]

Which self-driving car business would you bet on: One that's sinking most its capital into developing its self-driving technology, or one that's sinking most its capital into subsidizing drivers' incomes, and needs to do so simply to stay alive?

If Uber really, really believed that self driving was such a sure thing for them, their optimal strategy would be to wind down the rideshare business, the food delivery business, and all its other businesses that aren't self driving, so that it could redirect its mountains of capital toward developing self driving even sooner. Because as soon as cars that really can operate fully autonomously hit the scene, it's not going to matter who was incumbent in the rideshare space or how dominant they are. The company with the self driving cars will take over just about as quickly as they can manufacture new cars.

The fact that they're not playing it this way implies that they're not so confident that they're well positioned to be first past the post with self-driving cars. Which means we probably shouldn't be, either.

[georgeecollins]

I believe Rodney Brooks when he says that autonomous cars are much farther away than some predict. Not in five years anyway.

[dragonwriter]

> Don't forget that Uber is in the autonomous driving business.

Or, at least, has spent a lot of money failing to be in that business.

> They burnt through cash to get market share, because when self driving becomes a thing, they'll have a huge swing in margins/profits as self driving will get rid of their greatest expense (human drivers).

Established relationship with human drivers and the acquisition cost to overcome that is a big part of Uber’s moat, which is potentially erased when self-driving from anyone but Uber is real.

[justapassenger]

They are far, far behind in autonomous driving business. They tried to catch up, by being super reckless, and they killed a person.

Using self driving car to justify their valuation is very risky - it's huge project, tons of competition, no idea about when it could even become a product, etc.

[foobiekr]

Uber is also in the flying taxi business.

Alternately, Uber attaches their public messaging to external hype cycles and, in fact, is just a taxi business.

[hash872]

I can't speak as to what Uber's earnings will be 5 years from now, but I can recommend Stratechery by Ben Thompson as a way of understanding tech company's 'moats'. And how they're qualitatively different from moats enjoyed by other monopsonies in lower-tech eras

[joefourier]

Is Uber really a tech company? Sure they do some R&D on the side, but they are first and foremost a mostly unlicensed taxi company with a ride-hailing app - I think the proper term is "e-hailing company".

[todd3834]

I've been thinking about this too. I think you are betting on whether or not they are still just getting started. I'm thinking about self driving cars and how much growth can happen there if they crack that nut.

When Facebook IPO'd did they already have the self serve ad product rolled out? I believe Google did not and if you could imagine that future then it might have been easier to see a bright future. I didn't see Android coming until the iPhone came out as another example.

[justfor1comment]

Google and Facebook are ubiquitous outside the US, as well. Uber faces a lot more competition such as Lyft, Grab, Ola, Didi, GoJek. Also each one of these competitors has acquired a piece of the market. Google and Facebook were also easier to scale since they are purely software pursuits. Uber on the other hand has to deal with driver protests and government labour regulations and taxi licensing.

[ummonk]

Well, a more apt comparison for Uber would be Amazon.

[masonic]

  at the moment of their IPO

Is a case of Facebook, you were wise to not buy at the IPO, given that their share price dropped almost in half in the subsequent months.

[georgeecollins]

Yeah but I guess what I am trying to say is the tools I ahve used miss certain situations.