The most anticipated IPO (initial public offering) of the “It’s Different This Time” era made its debut this past Friday. First came the prancing on the famed paddock or “viewing area” known as the mainstream business/financial media.
Then it anxiously entered the starting gates, the “gun” was fired, signalling the most anticipated race had indeed begun as the “Unicorn of Unicorns'” emblazoned with its ticker symbol UBER leaped from the gates – where it proceeded to limp, stumble, then, basically needed to call an Uber to try and at least get it over the finish line. Which was, for all intents and purposes, get a sale at or above the IPO offer level of $45. Hint: it didn’t.
It would seem the “hailed pick-up” (aka underwriter support) then ran out of gas and needed to call itself a tow-truck to then sheepishly drag itself off the field, where it closed (or was put out of its misery?) not only below its IPO low range, but worse, below its $42 opening bid.
The reason why that too is a real issue, is this: as far as the “low range” of the initially anticipated trading area is concerned? Not only did it never make it? (e.g., $45) It closed at the bottom end of that days entire trading range. (e.g., $41.57)
Can you say “Uh oh?”
For those that would rather say it in a more business friendly manner, let me give you a few of the words used to explain it via the many so-called “smart crowd” paraded across most mainstream business/financial media outlets. You know, the ones that have been talking (and hyping) up this mythical business creation since its founding. Here’s just a few. To wit:
- “This is a train-wreck!”
- “How did the bankers get this so wrong?!”
- “If they can’t get it to $46? It’s the end of the unicorn era!”
Ah yes, “the end” was my personal favorite. The reason for that? It’s been over for quite a long time. The only ones that seemed to not know are those that are supposed to be “the experts.”
So I ask again, as always: Is it any wonder why these outlets are losing viewers as fast, if not faster, than these unicorns burn cash? But I digress.
It’s not like no-one couldn’t see this latest disaster manifesting from miles away. As a matter of fact, I have been articulating the argument that this was precisely what would manifest as the Federal Reserve pivoted away from running the monetary spigots at full blast.
The warning signs were all there for those that believed reality does have a way of catching up. For those that still believe in unicorn business models? All I can say is: Good luck with that, you’re going to need it, lots of it.
Back in 2017 I made an observation and call which, once again, carried the usual derision, name calling and more via the Silicon Valley aficionado set, which amounted to nothing more than (the usual) petulant name-calling or holier-than-thou stance to have dared insult their childlike, fantasy styled business dreams for riches. Or, for some, their self-anointed Silicon Valley “influencer” status of everything fairy-tailed, void of viable business models or metrics just making sh#t up and hoped
suckers people bought it.
Here’s what I said in April of 2017 concerning Uber. To wit:
…there is something just as closely being watched and the implications for what many (especially myself) would deem as a possible extinction level event is playing out right here in the U.S. Although, this one does not involve anything pertaining to military.
No, this one is the current nearly unstoppable “chain reaction” type event happening in the once unfathomable business unicorn known as Uber™. This slow motion train wreck of what was once The unicorn of all unicorns in the current stable seems to be not only imploding – its once argued defense shield worthy of DARPA against any and all criticism seems to not only have been assailed, but appears to be all but destroyed by Uber itself with the latest headline that its head of communications (i.e., PR) Rachel Whetstone has now joined the growing list of high level executives to “dive out the door” of this still moving investment vehicle.
Regardless of the reasons, or innuendos circling about with this latest staff change, one element is undeniable, and it is this:
When a company’s head “PR” person quits smack dab in the middle of what can only be recounted as one of the most disastrous yearly beginnings in Uber’s short history (i.e., scandals, senior management leaving, CEO melt down caught on video with a driver, and more) and that company just so happens to be the most valuable start-up (e.g. a unicorn said to be worth some $68 BILLION), while also claiming the title of “disruptor of the disrupters”, and, is a cash burn machine with no concrete date for IPO? It’s the equivalent of a harnessed team of (e.g., all of The Valley’s) unicorns running smack dab, and full stride – into a concrete abutment. The resulting carnage will be legend.–Unicorns Watch In Horror As Uber Careens Towards Extinction Event: A Down Round
So now that this “horse is out the gate” as the old saying goes. It’s not too hard to see where this race seems to be heading for its official ending. Hint: Thelma and Louise.
Uber seems to now have cemented that moment in history as Pets-dot-com did at the end of the last “businesses don’t need to make money – all they need is a fairy-tale narrative” era known as the Dot-Com’s” (aka dot-cons)
Does it have a chance for redemption? Sure, anything is possible, but with the Fed and other central banks no longer as free with the free-money as they once were, it’s highly questionable.
I would say the next big investment opportunity that’s about to hit Silicon Valley is the same one I alluded to way back in 2015, when this all began. (i.e., meaning the slow rolling demise of IPO’s and more)
“What’s that?” you ask. “Is it crypto related? Maybe cannabis? Or maybe some new fangled (which is actually old) way to make meat from plants? Or maybe it’s some new tech gadget that some guru is pitching that will make up for all the lost retirement revenue his ideas have already wasted? Because there really is a lot of catching up to do to cover those losses!”
No, it’s none of those, but it may have something in common with them which I gave in 2015. To wit:
The only caveat I’d add today is this: if I were looking to take advantage of this idea, I’d hurry up and get whatever stockpile you can. For the reasoning is simple:
How do you think those that skipped this latest IPO bonanza are going to feel when their “unicorn” of choice hits the gate? aka WeWork, or is it The We Company™? I can’t keep up anymore.
I mean with more of these once deemed “sure bets” hitting the tape, all one can conclude, is there seems to be a constant demand for only one – and that “one” doesn’t seem to have a ticker symbol. So with that in mind, here’s an idea to add even further value, free of charge…
Have those ‘crying towels’ monogrammed with your ticker symbol of choice to mark the occasion. After all, I believe the sock-puppet mascot of the prior crash is still a valuable collectors item. Or was that Beanie-Babies®?
Well, it’s all the same thing, right?
© 2019 Mark St.Cyr