$6.5B is the recognized loss, i.e., the lowest possible amount they can get away writing off on their accounting books.
The real economic loss may be much higher.
The real economic loss may be much higher.
Think that's a bit of a misunderstanding of what's going on. IFRS doesn't deal with valuation methods per se. It's a principles driven set of standards. In this case that's "fair value". The valuation method would be driven by something like IPEV
http://www.privateequityvaluation.com/Portals/0/Documents/Gu...
From my (risk management) perspective and in an environment where it's usually mark-to-market and mark-to-quite-sophisticated-model, I just had to blink a few times when I learned that things like the net assets-approach (why is that even an approach) exist. I do understand that in the cases I see there would be materially no difference for the investor (small investments, large firm) when using a more advanced approach like DCF (which still hinges on a few key assumptions).
Company, accountant, valuation committee, valuation team, investment advisor and possibly external administrator all sorta play for the same team. They collaborate to get to an approach and a number. Then the auditors roll in and check whether they think the approach is reasonable, assumptions are reasonable and calc was done right. If they don't like it they might force a change.
What's acceptable driven more by industry specific norm than anything hardcoded. So I might be looking at two similar debt contracts but do something wildly different because the one is back by real estate deeper in the structure while the other is part of a private equity structure.
Not really something an outsider can easily look into - cause it's often in the context of a interlocking web of controls - that again differ by entity/sector.
DCF - yes, though more complex isn't necessarily more accurate. In fact I dislike it because it's so easy to manipulate & difficult to call bullshit on.
>net assets-approach (why is that even an approach)
It depends on what in it basically & how those in turn were valued. Plus nature of the entity - for income/cash generating entities you do something like DCF or EBITDA peer multiple instead.
https://www.iasplus.com/en/standards/ifrs/ifrs13
No anchor links on that page, so I'll just quote some snippets here:
Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs inputs are unobservable inputs for the asset or liability. [IFRS 13:86]
Unobservable inputs are used to measure fair value to the extent that relevant observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. An entity develops unobservable inputs using the best information available in the circumstances, which might include the entity's own data, taking into account all information about market participant assumptions that is reasonably available.
A real economic loss is a realized loss. As long as Uber and WeWork are not closed down, their future performance is hard to predict. Uber especially is not a bad company. I love them. And if you have used Uber you ask yourself, how could you have tolerated the taxi clusterfuck so long.
As to a financial analysis of Uber, you're confusing some things. Uber did invent the summon-a-limo-with-your phone thing, so they get credit there. They didn't invent the rideshare model, but they did raise the most money to crush their competition and they were the most aggressive about committing crimes, so they currently have the biggest market share.
But all of that's ancient history. The real question for financial valuation is whether they can sustain that business once they stop burning investor money to get ahead. And I think there's good reason to believe that it will never be a particularly profitable business. Since Uber's valuation is built on being able to one day extract oligopoly rents from a large sector, it's perfectly possible that 10 years from now they'll be the next Groupon: once the new hotness, but with the stock now trading at 10% of its peak.
Why an investor would love this arrangement is not clear to me.