Uber is uber-expensive for a firm that trades at 6 times revenue and will lose at least $1 billion every three months in 2019 and 2020. Amazon, an infinitely more attractive global E-commerce/cloud franchise, trades at just above 3 times revenues – and Amazon does not face cutthroat competition from Lyft, Didi, Grab, Yandex Taxi, Ola etc. The political wind is also stacked against Uber as populist/leftist municipal governments in the US, Europe, UK and Latin America will impose higher wages for drivers, as New York City just did. Uber cannot remotely compete with Waymo, Tesla and Apple in the Darwinian economics of driverless cars. I see no reason to change my view that Uber shares will fall to 30 – 32. This is a strategic short.
I instinctively grasped that Beyond Meat would dramatically change the carnivore culture of humanity in the US and become a global sensation for animal lovers/vegans/
Beyond Meat surged 38% after CEO Ethan Brown blew away the Street’s best and brightest on his conference call. Even though the firm forecast a mere $210 million in 2019 revenues, Brown spoke about the sheer scale of his growth runway and his innovative Manhattan Beach Project, echoes of Robert Oppenheimer and the Manhattan Project to build the atom bomb that incinerated Hiroshima/Nagasaki, a curious analogy for a company dedicated to save the lives of animals!
Beyond Meat trades at more than $8 billion valuation at 138 as I write, its 38% post earnings rise due to a quintessential short covering squeeze, not fresh accumulation. I would short the shares here for a 105 target or at least not buy this puppy at these nosebleed valuations. This IPO is phantasmagoric, Salvador Dali-surreal, the financial equivalent of Gabriel García Márquez’s magical realism. Net-net, only a masochistic nutcase would buy the Beyond Meat IPO at 138. Beyond Meat at these levels is at the epicenter of a speculative mania, like Dutch tulips in Rembrandt’s Amsterdam, Kuwait’s Souk Al Manakh and the dotcom bubble. This bubble will burst. The shares could easily lose half their value but the business will endure, grow, globalize even if the shares fall to 60, when I promise I will write another column on this IPO!
Also published on Medium.