Ubers IPO was a flop, although their banks used every trick in the book to keep the stock price crashing on day 1, including having bought shares themselves in a tactic called "naked cards".
But investors who looked at Uber's revenues, burns, monetary debt, growth rate did not bite, and now the billionaire Marc Cuban weighed in saying he was not surprised at the difficult time Uber had.
He told CNBC on Tuesday that he owes the Silicon Valley venture capital industry.
Read: 3 reasons why Uber had such a strange and terrible IPO, according to a portfolio manager who would not buy the shares
"It's not a growth company. It's a brand you just waited for There is nothing exciting about it, Cuban said. It's not a good sign, "Cuban said, who is an investor in rival rival Lift.
Many unique Silicon Valley companies go public when they are unprofitable, but make investors comfortable with the red bleach by showing how today's spending will translate into explosive growth down the road.
While Uber's bankers and executives are laying Uber as the next Amazon, the figures tell a different story, Amazon was released in 1
Blame the VCs
"You are nine years old and the concert economy is challenged when unemployment is low and the economy is growing, because it is not a primary job for most people. It's a last resort job, "Cuban said. (Technically, Uber was founded in 2009, so it's 10 years old, but it launched its first beta black-car ride hailing service in 2010.)
To be Fairly, Uber's revenue increased in 2018 in 2017. And even though it is the market leader in the trip, the other has promising businesses, such as food delivery.
But Uber only showed a profit in 2018 because it sold one of its business units. It's not the typical sign of growth a company.
Read: Here's who gets rich on Uber's massive IPO
Cuban is due to the Silicon Valley VC system, the love of unicorns that keep companies private In the biggest growth stages, concentrating large returns early investors and growth funds investors.
"I just think we see a reflection of the Silicon Valley ethos in the public market. The whole attitude was waiting, wait, wait, wait. You will not cope with IPO. But at some point, all the VCs need a liquidity event. It also suggests that they are not very good at valuing companies. "
Many of these investors sold part of their bet to the $ 45 IPO prize and still liked the listing well.
But most of them still have the bulk of their bets unlocked for at least six months before being allowed And while they all want to make money in stock they bought for as little as 33 cents to $ 3.50 per share, they will obviously do better if the public stock does better.
"Clearly they heard not "
Cuban is an investor in Lyft and was also not thrilled with Lyft's stock market introduction.
" I'm still a bit in my warehouse, it was $ 1 million, so it was big, but not big for me. No, I haven't bought any more. When I bought in Lyft there were four many years ago, and I have pushed them to go public from that moment. Of course they didn't hear. "
Lacking share price still made the company's founders, early investors and top executives of very wealthy people, it's harder on rank-and-file employees. In Silicon Valley, many people get a share of their compensation in stock.
In 2017, with the company value increase, Uber gave 2.9 million stock options and 41.2 million shares known as limited stock units in 2017 at an average strike price of $ 41.39, reported by Business Insider's Troy Wolverton, usually linked to performance expectations and unlocked Over time, stocks that employees bought at that price, or have to buy at the price their shares lock up, are now under water with Ubers trading well under $ 40.
e with or was issued shares, in 2018, has a slightly better shape. Uber's valuation fell, thanks to its widely published board games, which included Softbank to buy a large share at a discount. Employee stock options from 2018 have an average price of $ 33.45, while limited shares had a grant value of $ 36.73 per share.
At Uber's current share price below $ 36- $ 39 / share, these shares will not generate employees much of a return.
Read: The woman who called Uber's IPO clock is Austin Geidt, whose life is thing in Valley legend
The company hoped no doubt about a much better IPO. It offered CEO Dara Khosrowshahi a huge bonus worth over $ 100 million if the company's valuation hit a high $ 120 billion and stayed there for three months. He is not close to meeting that figure yet, but the board will probably be happy to honor it if he can pull it off sometime in the future.
So the unicorn wait is not really worthwhile for almost anyone who goes with these companies late.
"It's not a very efficient market for centrifugal companies in evaluating stock quotes, says Cuban. While the profitable Zoom worked well," Pinterest, Lift, Uber all of them, I think it's a real challenge. " 19659002] Cuban hopes that these difficult stock market listings will change the minds of investors in the valley, many of whom do not jump early to invest in young companies, but "prefer to invest later and later and later," he said when "you have a group unicorns, although there are paper unicorns, look good in your portfolio. "
He says that the sad IPOs in 2019 could serve as a wake-up call to the CEO and, in particular, employees recruited by later stage companies and offered shares as part of their wages. They will ask themselves if their stock will make them for some money.
Here is the full interview with Cuban: