The ride Hailing company, UBER went public last year

Uber is a ride hailing company meaning the company offers its vehicles for riding through desired routes and hiring then through websites / apps for some time by people for travelling between locations in exchange of payment.

Uber went public on May 10 with a $82.4 billion valuation.

Reasons for ubers's losses:

Investor concerns about competition and the company’s path to profitability have pressured the stock right from the opening trade following the company’s IPO.

• One of the concerns of the ridesharing market -in particular in the U.S. has had - Uber and Lyft have been less aggressive in their head-to-head battle for customers.
• Uber demonstrated an accelerated path to profitability and set a formal 2021 profitability target.
• The company is showing a willingness to exit losing parts of the business, getting out of low market-share cities in the Uber Eats business for instance.
• The company has a modest price target, investors are sceptic that uber has more work to do to gain conviction on the key long-term debate of Uber’s ultimate margin profile and the path to getting there.

Uber has a valuation problem reasons being:

1. Overestimating potential market size: Damodaran, known as “Wall Street’s Dean of Valuation,” argues that while Uber, just like its number one rival Lyft, has attempted to market itself as a transportation services company, promoting an image of itself as a “personal mobility business” with a potential market of $2 trillion, it remains largely a car services company.

1. Hiding numbers: While Uber shows gross billings, net revenues, riders and rides all increasing strongly between 2016 and 2018, Uber is still clearly a money loser, and some negative data points remain hidden in the numbers.
2. Hide key issues: Uber shows gross billings, net revenues, riders and rides all increasing strongly between 2016 and 2018, Uber is still clearly a money loser, and some negative data points remain hidden in the numbers. For example, it is noted that Uber’s cost of acquiring new users has been increasing, suggesting a maturation of the ride sharing market, or heightened competition for picking up passengers.
3. Complex valuing of company: The initial top down assessment of Uber valued its operating assets at $44.4 billion, with the addition of Didi, Grab, and Yandex Taxi upping the value to $55.3 billion. Including Uber’s cash balance on hand, as well as the IPO proceeds that will remain in the firm (rumored at $9 billion), and before subtracting debt, Damodaran known as “Wall Street’s Dean of Valuation,”arrived at an equity value of $61.7 billion. While the share count is “still hazy,” he arrived at a value per share of roughly $54.

The key issue why the investors are sceptical of the UBER IPO and it is losing value is the transparency and the overestimation of its assests .