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$Uber’s and $LYFT’s disappointing debut seems to be impacting “innovation” stocks more broadly. Two problems nullify that relationship:
First, $UBER and $LYFT no longer are innovators, as #autonomy will destroy their business models.
Second, given the serious overvaluation in private relative to public equities, many more $IPOs will fail. We see many like for like companies valued in the private markets at 2-15 times those in the public markets as measured on price-to-sales.
Moreover, the games played with valuation in the later rounds of financing understate the true valuations being paid in the venture world.
I have been as surprised to learn about these games in the private equity world as I was to learn about CDOs squared in mortgage bonds circa 2006-07.
