Society for Case Research MBAA 2020

Experience level: 
Intended Audience: 
Francisco López Lubián, Olga Kandinskaia

Uber’s IPO 2019: Assessing Value of a Disruptive Innovator

This is a decision case based on secondary sources. In 2019, Uber, the famous ride-sharing company, made waves in financial markets as the most controversial IPO valuation. With a wide range of proposed values, Uber puzzled investors, once again living up to its fame of a rebel and a disruptor. When Uber finally went public in May 2019, its IPO valuation stood at $82.4 billion. The heated discussion in the media continued even after the IPO: “Is Uber worth this amount? Is there still an upside potential for the investors who bought shares at the IPO price? What if this is a hype and markets are simply embracing higher valuations?” The fundamental question here is how we can assess the value of innovative digital companies like Uber. Via this case, students are introduced to several alternative methods of valuation, including the valuation based on the ‘real options’ theory. They need to choose which quantitative methods are appropriate and what qualitative factors matter in such cases. The novelty of the case is the link between valuation and the type of innovation that the company represents. The suggested valuation framework is applicable not only in the context of an IPO valuation, but also in the context of any kind of M&A activity.