The Debate Over Uber’s Valuation

The question is wrong. It's not "What’s Uber Worth?” because the premise that Softbank paid two different prices for the SAME share of stock is wrong.

Crunchbase News Suggests Softbank’s Investment in Uber Created Confusion About “What’s Uber Worth”

The question is wrong. It’s not “What’s Uber Worth?” because the premise that Softbank paid two different prices for the SAME share of stock is wrong.

I would posit that Softbank paid a different price for two different securities. The new shares bought from the company have a liquidation priority ahead of earlier issued shares with a preference based on the $68B valuation that has been reported. The older shares bought from the existing investors have a liquidation priority after the new shares receive their preference and then have a lower preference based on the valuation at the time those shares were originally sold. Because these shares are treated differently in a liquidation event, the question is whether the ROI of the two shares bought at different prices is the same.

Using the public market valuation methodology of Price Per Share x Fully Diluted Shares = Valuation only works when each of the Fully Diluted Shares receives the same value in a sale, which is not true in a private company with multiple classes of different preferred stocks.

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Brad Harries

Brad regularly shares his unique insights and investment banking expertise with readers, viewers and listeners of various forums like The Information, LinkedIn and other online publications that invite the views of their readership. His writing and speaking covers a wide range of topics critical to business owners, CEOs and those who advise them. He can offer simple explanations of often hidden information behind complex private valuation structures that imply one thing in a public market context but something very different among pre-public companies that aren’t required to disclose the details. Above all, Brad's not shy about challenging his peers and readers with an alternative perspective on market activity and health.

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Doug Schmidt
Partner and Investment Banker

Doug is one of the most respected middle market investment banking professionals in the Mid-Atlantic and has actively contributed to the growth of the region’s business community for over 30 years.

Brad Harries
Partner and Investment Banker

Brad spent the majority of his 40-year career with Wall Street firms developing unique expertise in serving the corporate finance needs of emerging growth companies.

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