tipperary

The math and timing intrigue. Losses of $530 million on $170 million in revenue. The model loses three dollars for every dollar of revenue. 

Not unusual for the digital business model that raises equity to pay for customers and suppliers at a rate greater than can be recovered from revenues or advertisement until the model can be sold through a public listing with the magic of the multiple.  

The usual private equity suspects have invested $5 billion in the model starting with a seed funding round of $2 million in 2010 and the last being November 2021. 

The ambition is to sell $1.2 billion to the public with the proposition that the model is worth $30 billion, or 30 times one year's worth of revenue. 

There are listed business models that provide metrics.

                    revenue        loss            market cap        market/revenue

Grab             .787 bn                            14bn                    18

Lyft              3.00 bn        -1.00bn        13bn                     4

Dash             5.00bn         -.500bn        33bn                     7

Uber            17.00bn        -.500bn        64bn                      4

The direct competitor that shares half the market has five times the revenue with a listed market cap of $14 billion or 18 times revenue. The model listed at $60 billion in 2021. Shareholders that purchased at the listing are now seventy-five percent less well off.

Other more mature business models that are listed have $25 billion in revenue, $2 billion in losses, and trade on average at 5 times revenue.

Thinking that a value of thirty times revenue at a fraction of market share with competition that will chase the zero bound of pricing may not age well.

The competitor and the template. Better to be a buyer or seller?