Uber’s IPO is even more dangerous for investors than Lyft’s has been

Uber’s bankers are getting cold feet. Lowering the anticipated IPO valuation from a rumored $100 billion to between $80 billion and $90 billion means investors are not buying the pitch as well as hoped.

We’re not surprised, and we won’t be surprised if Uber’s UBER, +0.00% valuation falls even further. Anything above a valuation of around…

$20 billion is a rip-off and makes no sense. Whether before or after the initial offering, the valuation of this stock will likely fall hard and fast. As soon as markets wise up to the fact that this deal is nothing more than a mechanism to dump a terribly overpriced private company onto unsuspecting pubic investors, look out below.

Frankly, we’re surprised the jig isn’t up for Lyft LYFT, +3.15% and Uber given that neither, in their public filings, even attempt to explain how they will ever make money. We would not be surprised if their lawyers would not let them put any such prognostications in writing for fear of the shareholder lawsuits if or when those predictions failed to materialize.

As we detail below, Uber isn’t growing revenue as fast as management would like you to believe while it is burning through cash like a trust fund baby on a shopping spree. The fact that there is any appetite for Uber (and Lyft) is a testament to the gullibility of our public equity markets.

In almost every respect, Uber looks even more dangerous than Lyft, which is already down 20% from its overvalued IPO price. Uber is growing at a slower rate than Lyft, loses much more money, and has an expected market cap that is about five times higher. Lyft’s troubled IPO has clearly dampened enthusiasm for Uber, which in turn is driving Lyft’s stock even further down. This feedback loop just shows that the valuations of these two companies only make sense in comparison to one another, and not to fundamentals or the rest of the market.

Numbers don’t back up the growth story

We’re not going to talk about Uber’s losses here, even though losing $3.0 billion in 2018 is astonishing. Everyone knows Uber and Lyft lose money, which seems to be a point of pride in Silicon Valley.

Instead, let’s talk about the story Uber wants to highlight for investors. According to Uber…

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