The talk about Uber these days involves corporate intrigue, the new chief executive and the prospect of various enforcement actions and lawsuits.
So to be just a tad contrarian, let’s talk about a different aspect of this mega-high-profile ride-sharing company: Uber-stockmath, as it were.
If you follow the news about Uber, you know that the company, whose stock isn’t publicly traded, is worth $70 billion. Or $68 billion.
Or something like that. But I’ve got serious doubts about those numbers.
Why? Because in the absence of a public market for Uber shares, we don’t know what willing buyers would pay willing sellers for the stock when the buyers’ and sellers’ only agenda is to buy low or sell high — not to garner favor with the company by paying up for new shares it’s issuing to raise money or to seem trendy or to pay more for new shares than a previous purchase cost, which would let it write up the value of the shares it already owns.
Uber’s new chief executive says the company might go public in 18 months. We’ll see. But for now, the only publicly available dispassionate prices placed on Uber shares vary widely, with a spread of more than 30 percent between the lowest and highest.
How did I get these numbers? By asking Morningstar’s mutual fund mavens to tell me which stock funds own Uber shares and at what price each fund values the stock.
The price range surprised me. The über price — “über” is German for “above” or “super” and I can’t resist a bilingual pun opportunity — was $53.88 from BlackRock. That was more than 30 percent above the unter (German for “low”) price, Morgan Stanley’s $41.24. Both BlackRock and Morgan Stanley are large, sophisticated outfits with lots of expertise in figuring out what things are worth, so the big difference is really interesting.
Vanguard valued the stock at $48.77 as of Feb. 28, according to Daniel Wiener of The Independent Adviser for Vanguard Investors, and carried it at $41.46 as of June 30. That’s a 15 percent drop in four months.
What BlackRock and Morgan Stanley — and the dozen other fund families that own Uber — do is estimate a total value for Uber, subtract its obligations such as debt, and divide what remains by the number of Uber shares outstanding. Some of the 14 fund families that own Uber do this themselves; others hire it out.
In the absence of a public market for Uber shares, the mutual fund numbers are the most reliable numbers available. That’s because unlike Uber boosters or venture capitalists or hedge fund types or others trying to talk up Uber’s price for whatever reason, mutual fund companies have legal obligations to use the most accurate numbers they can get.
The reason is that mutual funds’ shares are bought and sold based on net asset value per share. (That’s a fund’s net assets, divided by the number of shares outstanding.)
If a mutual fund puts too high a value on its Uber holdings, people selling fund shares benefit by getting a higher price than they should, while people buying shares are hurt by paying more than they should. If the fund lowballs the number, sellers are disadvantaged while buyers get a bargain.
So fund companies put the most accurate value they can find on a holding like Uber that doesn’t have a publicly traded, available price.
The list Morningstar sent me was fascinating. It showed 50 funds owning a total of just under 50 million Uber shares based on the funds’ most recent available filings, most of them as of June 30. The value show for those shares totaled about $2.36 billion, for a weighted per-share average — total price divided by total shares — of $47.20. In all, Uber shares made up a bit more than 0.4 percent of the funds’ total value (which was $536.4 billion for those of you keeping score at home).
The fund with the biggest concentration of Uber was Putnam Equity Spectrum A, at 4.6 percent. And Putnam’s quote — $43.89 per Uber share — was near the low end of the spectrum. The fund with the smallest concentration was the Fidelity Asset Manager 20% fund, whose Uber holding was 0.02 percent of its assets, with a price of $48.77, a bit above average.
As I hope you can see from these numbers, valuing Uber involves lots of estimating, with wide differences among different experts.
What I’d love to know — but couldn’t find out — is how many Uber shares are outstanding. If I knew that, I’d show you how using über-quoter BlackRock’s number would produce a value for Uber that’s 30.6 percent higher than we’d get by using unter-quoter Morgan Stanley’s number.
Someday, the Uber number that I can’t find will surface, and we may revisit the valuation question.
Meanwhile, to end on a Teutonic note inspired by the name of the company we’re discussing: Have an über-enjoyable Labor Day.
Alice Crites contributed to this report.