Uber says, 'Take that, Facebook!'
Uber is big…really big.
Various reports say the app-driven ride service is now valued at $51 billion following a new round of fundraising which brought in $1 billion. Included among the investors-- Microsoft (MSFT), which Bloomberg says dropped in $100 million.
The new valuation puts five-year-old Uber along with the elites in the history of private investment, reaching the $50 billion mark two years faster than Facebook (FB), which, by the way, is now worth more than $260 billion.
Yahoo Finance Columnist Rick Newman understands why investors are so high on the company.
“I think the enthusiasm here is that this is not just a new tech company that does something interesting,” he says.
And Newman sees a comparison to Facebook in Uber.
“This could be something brand new in the economy,” he notes. “We’re starting to see copycats. The big question is how far can Uber go beyond what it does already? Could this just transform big parts of the economy? And I think you can argue Facebook actually did that.”
But Newman adds the jury is still out whether Uber will be the new Facebook…or something else.
“Facebook was kind of the first to market with what it did and it remains dominant in what it does-- its valuation turned out to be valid,” he explains. “The skepticism of course is, what if Uber is actually Twitter (TWTR) and it doesn’t turn to be quite as revolutionary as we think and it doesn’t fulfill all this potential?”
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Newman believes Uber has the ability to be huge outside of America, pointing to the $1 billion it plans to spend to expand in India.
“It’s kind of a perfect model because you don’t need any infrastructure to ‘Uberize’,” he argues. “Their infrastructure is all digital. You find people with their own vehicles. That is the beauty of the model and it seems to be a model you can overlay on almost any market. So its global potential seems to be enormous.”
And Newman feels if Uber does stub its toe, it won’t be because there isn’t a demand for the service.
“Their biggest problem isn’t market adoption,” he says. “It’s going to be regulatory, where they get resistance from the established businesses.”
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