Shark Tank’s Mark Cuban, Kevin O’Leary Slam ‘No Growth, Zero Value’ Uber
Uber's IPO could be Wall Street's biggest ever flop and criticism is coming thick and fast. | Source: Shutterstock; Edited by CCN.com
By CCN.com: If the founders of Uber were to appear before the panel of Shark Tank reality TV show, they would certainly not get a dime from billionaire Mark Cuban or multimillionaire Kevin O’leary. In separate interviews, the two reality TV stars indicated that investing in Uber’s stock now that it has gone public was not something they would consider doing.
Canadian businessman Kevin ‘Mr. Wonderful’ O’Leary, was most brutal in assessing the ride-hailing giant. Speaking on CNBC, Mr. Wonderful stated that Uber is not worth investing in since it ‘doesn’t have any cash flow’:
This company [Uber] is value-less. It doesn’t have any cash flow. It’s a speculation. It’s no different than putting your money down on Red or Black in [Las] Vegas and giving money to one of these losers.
Mr. Wonderful: Elizabeth Warren Should Replace Dara Khosrowshahi at Uber
O’Leary also raised concern with the fact that Uber subsidizes rides for its users in a bid to win market share. The Canadian multimillionaire suggested Uber’s model is ‘one of the largest transfers of wealth’ due to the fact that it subsidizes the cost of rides by ‘about 30 percent’.
Consequently, Mr. Wonderful suggested in jest that the ride hailing giant should appoint someone with socialist leanings as its CEO. O’Leary’s candidate of choice? ‘Elizabeth Warren should be the CEO’ said O’Leary in reference to the Massachusetts senator and 2020 U.S. presidential candidate. Uber’s current chief executive is Dara Khosrowshahi.
Mark Cuban Thinks Uber Is in a Maturity Phase
The billionaire owner of basketball team Dallas Mavericks Mark Cuban, on the other hand, thinks Uber may already have matured. According to Cuban, Uber’s stock has tanked below its IPO price because it lacks growth prospects:
It’s not a surprise. It’s not a growth company … it is an 9-year old company.
Cuban, stated that the most concerning thing about Uber is that it is a decade old but still unprofitable.
The reality is that you are nine years old and you are still having to buy your revenue. That’s not a good sign.
Interestingly, Cuban was an early investor in Uber’s rival Lyft. Despite Lyft losing nearly a third of its value since listing Cuban said he is ‘still up a little bit’. He acquired a position worth $1 million in the ride hailing service in 2014.
Has the Stock Bottomed?
Since debuting on the New York Stock Exchange last week at a price of $45 per share, Uber’s stock has fallen by over 10 percent. It closed at slightly below $40 on Tuesday. This was an uptick of 7.71 percent from the previous day when it tumbled to $37.10.
According to Fortune paper losses on its debut trading day amounted to $618 million. This made the IPO one of the worst performing in the last few decades in the U.S.
Cuban has suggested that the stock market reacted this way because Uber ‘waited too long’ to go public. Additionally, Cuban blamed the approach Silicon Valley’s venture capitalists have taken where startups are kept private during the years when they are enjoying the biggest rates of growth. This leads to the concentration of huge returns to early investors and little for late-stage investors, according to Cuban.
Additionally, the Dallas Maverick owner attacked Silicon Valley’s valuation methods saying the fall in the price of Uber’s stock since going public ‘suggests that they are not very good at valuing companies’.
