Are Uber, Grab and Didi Being Overvalued? TheStreet Examines Exploding Ride-Sharing Valuations
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Version 0 of 1. Investors can't seem to get enough of ride-sharing companies. To start, look no further than the last 24 hours. The Wall Street Journal reported on Tuesday that Japan's SoftBank Group Corp. (SFTBY) is in talks with Uber Technologies Inc. about taking a multi-billion dollar stake in the sprawling ride-sharing startup, citing sources close to the situation. And on Monday, Grab, the top ride-hailing service in Southeast Asia, snagged $2 billion in new funding from investors SoftBank and Chinese ride-hailing giant Didi Chuxing. It marks the largest-ever single round of fundraising in Southeast Asia. As billion-dollar investments continue to flow into the ride-hailing sector, startups are seeing their valuations explode. Uber and Didi, most recently valued at $68 billion and $50 billion, respectively, now sit among an exclusive category of so-called "decacorns," or startups that are worth $10 billion or more. They're also the two most highly-valued tech startups in the world. Unlike other tech sectors, Didi and Uber's monster valuations haven't led to a duopoly in the ride-share space. Far from it, in fact, as more and more players enter the market every year. Three other ride-hailing startups are currently valued at $1 billion or more: Lyft ($6.9 billion), Grab ($6 billion) and India's Olacabs ($3.65 billion). But other, smaller services, such as Brazil's 99Taxis, Indonesia's Go-Jek and Russia's Yandex exist on a local level but still serve as a legitimate competitor against the big players. Some of the local players are said to be capitalizing on Uber's many PR controversies as an opportunity to secure big checks from investors. Earlier this month, Uber ceded the Russian market to Yandex when it merged with the Russian search giant's ride-hailing division. That's after it sold Uber China to Didi for a stake in Didi, seemingly adopting the mantra that if you can't beat 'em, join 'em. The more diversified the ride-hailing market becomes, the more investors seem to get excited about its potential. |