BUY UBER STOCK AT THE IPO?

UberUber stock can’t be bought yet and there is no stock symbol because the company is still a private company. As of mid 2016, there appears to be no plans for an Uber IPO and that means it will take place in 2017 at the very earliest. Right now Uber is valued at approximately $68 billion dollars after having raised in the neighborhood of $10 billion dollars from private investors and venture capitalists. That appears to be enough for the company to continue operation on its own for a long time without any infusion of cash from Wall Street.

Often in the news, Uber gets a tremendous amount of publicity as it is the largest ride sharing company in the world. But it faces fierce competition from competitors such as Didi Chuxing in China (which got a $1 billion backing from Apple)  and Lyft as well as a myriad of legal challenges from various states and local governments. The taxi cab industry is also in battle mode almost everywhere trying to make it hard for Uber and any other ride sharing service to legally operate.

In mid August 2016, Uber announced it would start a roll out of some semi-autonomous cars in Pittsburgh PA. What this means is that customers in that city would be randomly chosen to be picked up in one of Uber’s new fleet of Volvo SUV’s that will be manned by a real driver as well as an observer in the passenger side of the car. The ride will be free for customers and it is the first real attempt by Uber to push the self driving autonomous technology that it hopes to one day be the norm for the industry.

How To Buy Uber Stock

In order to buy Uber stock when it eventually goes public, you will need to have money deposited in an online broker account. You should do this well in advance of the IPO and once you do that you can buy stock of any publicly listed company. Buying stocks and growing your portfolio is something you should become familiar with doing as investing in the market is the best long term way to grow your money for retirement.

There are many online discount brokers to choose from such as E*Trade, Merrill Edge, Scottrade, TD Ameritrade, TradeKing, Optioinshouse and others. They are all equally safe to use, are well established, and their trading fees range from about $5 per trade up to $10 per trade. Opening an account online is simple and is the first step needed for any investor who wishes to buy stock on the US markets. Once an account is opened with any of these brokers, you need to fund the account by transferring money into it via wire or check. Once the money is deposited, buying stocks (including Uber stock once the company goes public) becomes a simple process that anyone can learn.

Will Uber Stock Be A Good Investment?

Should Uber be worth more than Ford? How about General Motors or Honda? At its current $68+ billion estimated valuation, Uber is indeed worth more than any of those car companies and that has to make potential investors extremely cautious. While Uber is certainly a force in the ride sharing industry, it is hard to imagine this company with an App and millions of drivers really being valued that highly in what is still a largely unproven business model.

When the Uber IPO takes place in 2017 or later, there is sure to be a tremendous amount of media attention. I predict the hype will surpass that of both Facebook and Alibaba or at least be near the levels those companies experienced. That means the IPO stock price on day one will probably be even more inflated from its already extremely high valuation price. In other words, no matter when Uber goes public, the stock price will be very expensive on a price to earnings basis.

Uber CEO Travis Kalanick has said as recently as March 2016 that Uber will not pursue an IPO anytime soon. While vague on the reasons, they probably include all the uncertainty surrounding the company due to legal challenges, the desire to become profitable in as many global regions as possible before an IPO, and the luxury of not needing more money from the public markets due to so much private investor money.

But there is another reason that might be worrying the CEO and that is the realization that Uber’s high valuation now may hurt the stock when the company does eventually decide to go public. Uber’s insanely high value in 2016 may not translate into investors on Wall Street gobbling up such an expensive stock. There is a risk for Uber if investors ultimately decide that the company is overvalued and the IPO price doesn’t hold up. So, should you buy Uber stock when it eventually goes public? That is clearly a wait and see question right now but it is doubtful I will be buying.