Is Uber worth $10 B?

The End of Traffic and the Future of Access: A Roadmap to the New Transport Landscape. By David M. Levinson and Kevin J. Krizek.

So Bloomberg reports that Uber, a so-called Transportation Network Company is worth $10 B. Clearly I am in the wrong business.

This implies that the net present value of all future revenue from Uber minus the costs of that revenue will amount to $10B (assuming they invest the money they raise).

Nationally there are under 250,000 taxi cab drivers who earning a salary of $23,000 apiece, giving a total labor cost of $5.7 B. New York City has about  20% of US taxi cabs and NYC alone serves 241 million annual passengers. Let's assume 1 billion taxi passengers per year nationally in the US, and $15 revenue per trip. So if Uber captures 100% of the  market, there will be $15 B in revenue per year. But that is before labor costs, which are $5.7 B, leaving $9.3B per year. (I am assuming no international profits, since urban surface transportation is highly localized, and why would any other country let a US company dominate?)

If Uber's gets  100% of this market keeping 10% of remaining revenue for profit margin, they are plausibly worth $10B. This leaves the remaining 90% of that $9.3B to pay for the costs of fuel, maintaining the vehicle, owning the vehicle, and operating a back end app.

Currently Uber has 900 employees. I assume most of them are in the field.

Let's just say there is a lot of "hope" and "if" in this valuation.

The Financial Times lists companies by Market Value (March 2013). The smallest company with over $10B is Chipotle. Chipotle uses 37000 employees to be worth $10B. $10B is more than Southwest Airlines, an actually profitable airline, was worth. It is about the same size as United Continental.

We have other comparisons - Mastercard is worth $63B. Which would you rather own 1/6 of Mastercard or all of Uber? UPS was worth $62B with 400,000 employees. Do you think Uber with less than 1000 employees will be more valuable than 1.6 of  UPS? FedEx was worth $31B with 278,000 employees.

Is this a bad investment for the current investors? That depends. Are there greater fools, or are they at the bottom of this pyramid?