At the end of the day, Uber is a taxi dispatching company. 

Sure they have a presence in nearly fifty countries and have a smartphone app that connects riders with drivers. Their ride sharing model has disrupted traditional taxi dispatching models and has attracted high-profile investors like Goldman Sachs, Benchmark Capital, and Jeff Bezos of Amazon. But, any way you slice and dice it, Uber is in the business of dispatching rides.

So, can Uber’s $41 Billion Valuation be justified? After all, it is a taxi dispatch company!

If you have not been paying attention, Uber is a poster child for the sharing economy.

Based in San Francisco, Uber has been wildly successful in developing a substantial user base in a short span of five years. A recent post in Valleywag titled Leaked: Uber’s Internal Revenue and Ride Request Numbers provides some insights into the company’s revenue and subscriber growth profiles. Numbers extrapolated from a weekly dashboard show an estimated 3.8 million people signed up for the service in a twelve-month period. Using the same dashboard, Valleywag’s “very, very rough calculation” puts Uber’s 2013 revenue at around $210 million.

Certainly not chump change; but not enough to justify the $41 billion valuation!

It probably has to do with the potential of the company and the evolving sharing economy.

A quick look at the embedded Slideshare from Valoriser Consultants titled “Online Cab Aggregators around the World” will show you that Uber is by no means alone in this space. The top thirty companies in the business of sharing rides or matchmaking riders and drivers have managed to attract customers and investors.

Company valuations and acquisition prices seem to have skyrocketed based on their future potential and subscriber count.

A recent valuation of Airbnb, the web-based room renting site came in at a whopping $13 billion, while most of us are still trying to make sense of the $19B that Facebook paid for Whatsapp.

The days of valuations based on revenue, margins, cash flow and assets are a thing of the past.

To put things in perspective, the Canadian Imperial Bank of Commerce (CIBC) with $11.0 billion USD in revenue and $308 billion USD in assets has a market capitalization value of $35.5 billion!

Go figure!

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