Ride-Hailing Startups: Why Do They Get Such Crazy Valuations?July 14, 2015 12:29 pm
It is common knowledge that Uber valuations have reached the sky – Uber is now worth more than Nissan motor. Then there is this recent news that Didi Kuaidi is now valued at about $15 billion. Of course, India’s Ola is valued in the billions as well – $2.5 Billion, to be precise.
Some numbers now. This is from Forbes –
“If you assume a normalized long-term free cash flow margin of about 35% (yes, this is quite high, but Uber’s business model is very efficient), Uber’s $50 billion valuation means that they will need to generate about $35.7 billion dollars of gross revenue and about $7.1 billion dollars of net revenue to justify the recent valuation. Perhaps more interestingly, the company will have to have an annual growth rate of about 286% each year over the next five years to hit these numbers. To put those numbers into perspective for a moment, it means that Uber is currently valued at 125x trailing annual net revenue.” Source
Which slide in these ride-hailing companies’ pitch decks are we missing?