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Uber’s $90 Billion Valuation is Fairy Dust

At $90 billion this makes Uber bigger than Caterpillar, Morgan Stanley and DowDupont. But Uber doesn’t make any money. It actually lost $3 billion last year and it’s seriously struggling to grow. Its revenue growth rate went from 106% in 2017 to 42% in 2018. The company is also losing market share to new competitors and failures in China and much of Southeast Asia are not helping.

We’re not dealing with reality anymore and investors need to be extremely suspicious. Ride sharing companies like Uber operate in a separate universe, where losing billions is of no consequence because it’s all based on future profits, profits that might never materialize. But time was running out for Uber (and Lyft). When the private money gets anxious, the public markets become the last source of income. It’s the time for early investors to cash out. But at these astronomical valuations these companies are not investing opportunities for the rest of us. They are traps until the market figures out their true value, as we’re seeing with Lyft.

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