Will You Buy Tesla, Uber, Airbnb or DoorDash Stocks in 2021?
I compared the valuation between the popular new unicorns and some traditional corporations based on Yahoo Finance 20201/01/03.
The new unicorns valuation is extremely overpriced compared to traditional American corporations providing similar services while they lost millions of dollars.
Some people might argue that the reasons why the grow stocks price are riding the rocket to the moon because the US market with low interest rate tolerates the net loss of the growing business and expects the rewards from the grow stocks after 10 years.
What if the grow stocks keep losing money in the next 10 to 30 years and never achieve success in their business models?
Hopefully we won’t need to listen to Billie Ellish’s When the Party’s Over and start pouring coca cola on the newest iPhone 12 with Robinhood on the screen in the next few months in 20201.
Uber is almost 70X as First Group
Most people might use the national bus service Greyhound once or twice in college in the US but few millennials know it is owned by First Group, a Scottish company. First Group also owns both bus and train transportation services in Canada, UK and Ireland and also operates the famous London Tramlink. These two companies are not quite comparable as their coverage areas and transportation services are different. The assumption that Uber was valued more than traditional transportation service because Uber is easier to scale without any physical assets. The finance report tells us Uber’s struggles.
According to Uber official investor website, it reported a total $612M loss in Q1 and $812M loss in Q2 in essentially net income (or earnings) with interest, taxes, depreciation, and amortization(EBITDA) in Q1 2020.
Uber lost almost a total $1.4 billion in Q1 and Q2 2020. If we assume Uber is expected to lose $2.8 billion in 2020, the loss will account for 2.8/95 =~ 2.9% of the company valuation.
while First Group actually reported a profit of 10.4M GBP ( ~$13M). I am not a professional advisor, so I am open to hear your ideas on how Uber’s business model can keep rolling in the next 5 to 10 years.
The valuation of Airbnb is 223% more than Hilton
Not only Airbnb is higher than Hilton but also based on the data in 2020/12 the valuation of
Airbnb > ( Hilton + Marriott + InterContinental Hotels Group (IHG) )
There are no available official finance reports of Airbnb for the full year of 2020 yet.
What’s your guess?
Based on their SEV.Gov S-1 filing documents, Airbnb experienced net loss of $670M and adjusted EBITDA of $250M in 2019 when travel industries was not damaged by the pandemic.
Airbnb reports $696M loss during the first 9 months of 2020.
Tesla values 1.2X as Berkshire Hathaway
This scares me most because Warren Buffett’s company Berkshire Hathaway survived and grew its value through multiple crises in history. On top of that, Tesla is almost 2X as JP Morgan Chase. According to Yahoo Finance news on 2020/12/31, Warren Buffett’s top 5 holdings are Apple Inc, Bank of America Corp., Coca-Cola Co., American Express Co. and The Kraft Heinz Co. The Oracle of Omaha did not buy any Airbnb, Uber, Doordash or Tesla stocks in 2020.
In December 2020, Dr. Michael Burry tweeted about his bet against Tesla. The tweet has been deleted soon after.
Michael Burry wrote the global automobile industry excluding Tesla has 92X sales than Tesla. The automobile industry generates $100B profits while Tesla lost $69M.
In a long term, does Tesla generate more value than Berkshire Hathaway and have the resilience to survive the next crisis as Berkshire Hathaway and JP Morgan Chase did?
Summary
With the unemployment rate going up in 2020, the stock market goes up surprisingly in H2 2021. Maybe I will revisit the data of these companies in 2021/12.
- As always, it’s very risky for me to buy individual stocks when outsiders like me don’t have enough insiders’ information.
- Sadly the interest rate on saving accounts and certified deposit (CD) rate is as low as 0.15% to 0.4%.
The hype of investing in these companies compensates for the disappointment in the decreasing value of US dollars and limited amount of safe financial products. There are rare options of investing with low risks during these turbulent years. I might stick to ETFs and gold as it was suggested thousands time to newbies in investment.
Are you confident about buying or holding the stocks of Uber, Airbnb, and Doordash in 5 years even they lost almost half to a billion every year?
Please leave the comments below. I would love to learn the reasons behind the rise of the new generations of unicorns.
Disclaimer: This article is a summary of my self exploration in studying finance. It does not mean to provide any finance advice. Please consult professional finance service if you need help.
