what’s the guys it’s Graham here so two things number one a picture of my land has been going viral lately on the internet people are saying it’s it’s like a black hole or something like that I just want to put this to rest once and for all it’s just a picture of mine lamp so anyway let that be known and number two some shocking news and it’s it’s actually not that shocking we’ve known about this for a little while now but uber is getting ready to have an IPO at any time one of these tech companies is about to go public it comes with a massive amount of attention and hype and then investors get into a frenzy to try to buy it as soon as possible to then ride the wave to as quick of a profit as they can however let’s be real that many IPOs don’t exactly go as planned and this could actually be a massive mistake that many people should have void and I’ll explain why and of course I just want to get this out of the way for legal reasons is that this video is purely just my opinion and any speculation on my part should not be seen as financial advice or fact and all of this is really just for entertainment purposes only I have no monetary gain in the performance or lack thereof of uber stock and you should hit the like button if you understand that this video is just for entertainment purposes only so so no one’s upset here okay anyway let’s get into the video so anyway here’s some background uber if you haven’t heard of it you really need to get outside more often if they’re one of the largest if not the largest ride-sharing platform in the world with 91 million active monthly users and don’t get me wrong I’m a huge fan of uber I use them all the time when I can’t get a lift that was a joke but seriously though I use them a few times a month and I know they’ve been through their growing pains and struggles along the way but it is a company that I do find very useful they also expect to IPO and become a publicly traded company with evaluation nearing a hundred billion dollars that’s basically the value of a hundred Kylie Jenner’s however once you start getting into the financials of uber this is where things start getting a little shaky because they lost 1.8 billion dollars in 2018 and also in addition to that they’ve handled ongoing lawsuits they’re fighting regulation every step of the way and they warn that they may ever achieve profitability so from my perspective I’m just not seeing how this IPO would make a good investment here’s where I personally believe that many of these IPOs might have a darker side and we’ll put on our tinfoil conspiracy theory hats for this one and let me explain so you typically an IPO is seen as a way for a company to go public and then raise money and then use that money to reinvest back into its business but uber doesn’t need that money and if uber needed to raise capital they would have no problem doing it and by going public they’re just opening themselves up for so much more scrutinize ation so what’s the point of uber going public now call me crazy here but I personally believe that an IPO like this is just a way for existing investors within the company to finally cash out of their position and take a profit while they think the company might be nearing its peak value before it starts declining but just imagine with me for a second if you’re an early investor in uber and you sink ten million dollars in it in 2012 and now today that 10 million dollar investment is worth 250 million dollars you’ve had your capital now tied up for seven years your money isn’t growing as fast now as it was during the early days the company still isn’t profitable maybe you anticipate it’s going to start declining in value in the coming few years and you just want to take your cut now take your profit move on and move it into something else so what do you do well you get all of the other private investors together and you pressure the company into going public then you can cash out of your position and get your money back and then move on to something else and meanwhile someone else is holding the bag when they buy it and that way it’s their risk and not yours now to be fair I’m making this a lot more cynical than it really is and don’t think that every IPO out there is just a way for investors to cash out and get a quick money grab because that’s certainly not the case and many companies just need to go public beyond a certain point but I do believe that there are IPOs out there as a way for investors just to cash out get their money when they believe they’ve hit somewhat their peak value and then it’s someone else’s problem to worry about like I just put myself in that position and I think to myself if I was an early investor in one of these companies what I want to sell at the point where I think the company is somewhat hitting its ceiling or maybe when I think I’ve already gotten the highest return for my money giving him at a risk that I want to take and if I was one of these investors and I felt that way then certainly absolutely I’d want to sell and an IPO is a way to do that now just look at some of the average performances of previous IPOs the average return for IPOs from 2012 to 2015 was just 7% meanwhile the S&P 500 was up 60% just think about that for a second the overall stock market performed nearly 10 times better than tech IPOs during that same time frame and let’s be real here but picking one of these tech IPO winners in the long term is really kind of like picking a needle in a haystack now we could quickly go back to a recent one and that is obviously lyft they opened its $78 and then they went down to 61 dollars today I think we could all agree that that didn’t go as planned or just take snap crap I was sorry snapchat for example they IPO 227 dollars per share about two years ago and then it’s done nothing but drop further and further and personally I believe that it will continue to drop and they have offered nothing innovative lately until it’s going to become either a penny stock or some other company just comes and buys it and then tries to revamp their business model honestly I have not used snapchat in such a long time and I think that’s an indication of what I think of them is a company now let’s even take this example of Facebook and even though they’re trading right now at a hundred and eighty dollars a share they began trading at about $38 per share in May of 2012 and then the stock price dropped down to about 18 dollars just three months later where another really good one is Alibaba they opened up at about ninety three dollars and enjoyed quite a run up to about a hundred and fifteen dollars with some really good press around it then they continued to fall for about a year until it hit $59 the reality is that I believe that many of the people who are going and buying these tech IPOs on the day they start trading are just not very sophisticated investors these are investors who are very speculative who hope that they can buy in an IPO price and then ride the wave on momentum and then hope to cash out very shortly after for a quick profit the problem is that catching this wave is nearly impossible and timing this wave is nearly in and being able to make very quick easy fast money isn’t without a very considerable amount of risk so if you’re interested in investing in uber here’s my take on it first of all never invest in a company on hype hype just means that the price is artificially inflated through investor excitement and exuberance and doesn’t really reflect the true actual value of the company and what it’s worth like excitement doesn’t pay the bills I can’t imagine any board executive sitting there to hedge-fund thinking like okay so we got goober excitement that’s up 40% last month and the excitement is expected to continue over to the next quarter by about 80% excitement in 2020 and we’re expecting to see an average growth about 8% excitement per month and congratulations you guys we’re about to see a lot of excitement like just remember this is a company that lost 1.8 billion dollars last year and doesn’t have a clear path to profitability this is also a company with a lot of competition that it’s going to need to fend against this is also a company that’s going to have to deal with self-driving cars one day and there’s a risk that they won’t be able to adapt this is also a company that many people compared to lift and it sets the precedent that uber can also see a similar decline in its stock price now of course if you believe objectively that this is a good long-term business and that they’re undervalued and they have plenty of room to grow and expand then by all means go ahead and invest in it but just remember that many investors out there are very emotional and they just want to try to get in for a very quick profit and those investors think that they’re smarter than everyone else and at the end of the day that is going to affect the price that you pay especially around the time of an IPO and that’s a point I really want to stress on again that I think is very important is that every investor out there thinks that they’re smarter than everyone else so just keep that in mind that anytime you’re trading especially around hyper excitement that you’re just really hot dealing with psychology and emotion and that’s what really ends up driving the price of a stock early on however just to be fair and ubers defense I do think it was very smart of them to let lyft IPO first I don’t think that anything that uber does isn’t done without a lot of forethought and a lot of strategy and I think that by letting lyft IPO first they could avoid a lot of the pitfalls lyft had to kind of learn from along the way and by doing that I almost feel like that gives over a massive advantage that lyft just did not have especially now that they could adjust their market valuation to reflect maybe a more reasonable price and also I think uber is just a really useful service and I will continue to use it although most of the time lift this cheaper I’m gonna call it like it is that’s the reality we kind of all know it lyft just happens to be cheaper but when lift is not cheaper then I use uber so anyway going back to the IPO I just think to myself as an investor if I was thinking about buying this how is uber going to achieve profitability once we see self-driving cars are we going to need Ober anymore if so how is their business planning to adapt and how does that change the ride-sharing business model and then also what’s stopping Tesla from going and making their own self driving automobiles and then just running those on the roads at very cheap prices and then just undercutting uber until they drive uber out of business and then they just become uber and given all of that how is uber planning to expand I know we’ve seen uber pool uber eats and uber delivery how can we continue to grow and keep the momentum to me there’s really just so many questions to consider this a viable investment without really just seeing how things play out and again most importantly let’s not fool ourselves into thinking that some of these IPOs are just to let a verge investors graciously invest in booming tech unicorns and make profit I personally see many IPOs as just a way for early investors to finally cash out and reap the rewards of their early investment again just my opinion not fact not financial advice for entertainment purposes only all I’m saying is this just be smart out there analyze what you’re doing don’t get caught up in hype or excitement and really think objectively about where your money is going and honestly who knows I could very well be wrong uber could take over like an apple or an Amazon and just dominate the planet and again this is all just my opinion and I am human and I get things wrong and I am not always going to be right and this is just what I think so don’t take any of this as fact and definitely do your own research on all of this and also let me know what you think down below in the comment section I think all of you know that I read everything comment and I do my best to respond to as many people as possible so I’d be interested to hear what you guys think as well if you agree with me if you think I’m right or you think I’m wrong or you think I’m a moron if you think I’m an idiot if you dislike an unsub just whatever it is just let me know down below in the comments section so anyway you guys thank you so much for watching I really appreciate it if you guys enjoy videos like this make sure to smash the like button smash the subscribe button then smash the notification bell so YouTube notifies you any time of those two videos three times per week also add me on Instagram I post there pretty much daily so if you want to be a part of it there feel free to add me there Thank You Ben for watching and until next time