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Comment by Klinky | Hacker News Reader

There were plenty of cheerleaders back in the late 90s too, saying it's just the beginning.

Most of the social companies have yet to really show they can be profitable other than being bought out. Valuations are often grossly overinflated.

AirBnB and Uber are both skirting regulations and pushing risks onto their userbase. Regulations or a few continued instances of bad PR could pop their valuation bubble in an instant.

Compare companies overinflated valuations with how much they are actually being sold for or how much they're getting through IPOs.

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The thing you should keep in mind about stock market commentators, amateur or professional, is:

"If this person actually knew what they were talking about, they would be investing and making a fortune, not telling me about it"

It doesn't matter how smart they are, how many awards they've won, or how successful they've been in business. If they're making a public post about it, it's because they don't really know anything. If they knew, they would keep it quiet and invest.

you can do both though can't you?

if you think company X is going to do well, you invest in them, and then comment about how amazing it is. (That might drive up the price even more).

That is actually a common fallacy.

If you know what you are talking about, it is still in your interest to let everyone else know after you have purchased shares so that your shares will rise faster and higher.

Just because you are confident that something will go in a certain direction without telling everyone, doesn't mean you won't benefit from doing so.

As many economists like to say, markets can remain irrational longer than you can remain solvent.

Your saying really only applies to trading algorithms.

Yes it is called talking your book. Very popular.

I feel like Airbnb and Uber are both large and popular enough, at this point, to push regulation in the direction they see fit. Anyone standing in their path will be labeled protector of the old monopolies and anti-consumer.

Regulation change doesn't benefit only Uber though. It benefits all current riding sharing companies, as well as any future ones that might join the fray. In that sense, regulation change doesn't increase Uber's intrinsic value at all. If Google, for example, joins the ride sharing game then Uber will be in serious trouble.

Google Ventures is a major investor in Uber - does Google often invest in companies that they go on to compete with?

If they can build an entire fleet of automated cars? Abso-freaking-lutely. How much would you be willing to pay annually to not have to own a car but have one available at your fingertips at any time? My car payment + insurance comes to be about $7000/year. Throw in gas prices and we're probably at around $10,000 per year for my vehicle.

Factor in my girlfriend and our household is at around $20k.

If Google can charge me $10k-$15k annually to not own a car but be able to have it available all the time? What's $10k * 137,000,000? [1] At those levels, the failed Uber experiment can be a whimsical write-off. Or perhaps it's a strategic venture to handle some of these pesky regulations we're always talking about Uber fighting.

I don't want to own a car. I just want to have the freedom to be mobile at a moments notice.

[1]: http://cars.lovetoknow.com/Car_Ownership_Statistics

The problem is the underlying market for Uber (taxi and hire cars) can't generate enough profit to support their current valuation. When you add in that Uber and similar companies are destroying the monopoly rents that the industry was enjoying then the problem is even worse.

Maybe in the US (but I think thats debatable). Not certain for the Rest of the World, for example the EU sees regulation as being pro-consumer - it protects the consumer from bad practices from a company.

To me, its clear there is a non-zero risk that both businesses could get squeezed by regulation - the investors are betting that there won't be an impact from regulation or that the cost of following the regulation will be worth it (which you'd expect if you've got the scale to follow through).

The concept of a valuation being overinflated for a company that's trading publicly is kind of hilarious.

It's worth exactly what it's trading for at any given moment, by definition!

While I agree with this sentement in general, the market price can be distorted by supply constraints. Ask all the people that shorted VW back in 2008 and got caught up in a short squeeze that made VW the most valuable company in the world [1].

1. http://en.wikipedia.org/wiki/Short_squeeze

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