Uber IPO is a buyer-beware opportunity: Varney
This is Uber day, the day when ordinary people can invest in the biggest ride-sharing business of them all. If they wish.
I'm going to spell out the pros and cons as I see them.
First, if you buy Uber's stock, you're buying into an idea. You're buying into a revolution in transportation.
Use your phone to get a ride. What a concept. Uber is a disrupter. They've up-ended the taxi business and the whole idea of buying a car of your own. If you buy Uber's stock, you're buying into what's come to be known as the gig economy.
However, it’s not all plain sailing. A revolutionary idea does not necessarily translate into a profitable, dynamic company.
For a start, Uber is losing money ... a lot of it. It lost $1 billion in the first three months of this year.
Its costs are rising: Drivers went on strike this week for higher pay.
There's pressure to make drivers regular employees, with benefits, rather than contract workers. That would really change their business model.
There's the threat of regulation, like surcharges on fares, or restrictions on what types of cars can be used.
And yes, they've got competition.
These are known as "headwinds" which investors face if they buy Uber's stock.
But this is how capitalism works. Somebody comes up with a good idea. They form a company and go into business. At some point, they want to bring in more money so they can expand and develop.
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That’s what Uber is doing today. They'll raise about $8 billion. The founders and early investors will be rich, and you have the opportunity to buy in. Or stay out.
Your call.