Valuation expert says Uber is worth a little more than half the $100 billion it's seeking

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Uber’s real value could be much lower than the price where its public debut is set, according to one expert.

The ride-hailing start-up is reportedly seeking a $100 billion price tag when it debuts on the New York Stock Exchange this spring. But NYU Stern professor Aswath Damodaran arrived at his own valuation that’s roughly 40 percent lower.

Damodaran, a closely followed valuation expert, used two frameworks to come up with two lower price tags.

The first is known as a “top-down” valuation, a conventional way to value companies based on the total addressable market, market share, margins and reinvestment to come up with a value. The other uses a framework based on the amount of users on a platform, or in this case, riders.

His first version gives Uber a value for equity of about $61.7 billion. That translate into a share price of $54, although the total share count right now is “hazy” and that could change when the company updates its prospectus. The second rider-based valuation gives Uber a valuation of $58.6 billion for Uber’s equity, which, depending on the share count, translates to a share price of $51 per share, according to Damodaran.

Both estimates are well below the expected $100 billion, which translates into a roughly $95 per share, that Uber is reportedly seeking.

“The market is a pricing game and not a value game,” Damodaran told CNBC in a phone interview. “When you have young companies like these it’s all mood and momentum driving prices.”

A Wall Street Journal report last year put Uber’s valuation, based on proposals from Wall Street banks, as high as $120 billion.

Regardless of where it should be valued, the NYU professor said he wouldn’t be surprised if Uber still reaches that goal based on strong interest in other recent IPOs. Rival Lyft, for example, priced at the high-end of its expected range, kicking off a string of public market debuts expected this year from “unicorn” tech companies that are privately valued at more than $1 billion.

CNBC has reached out to Uber for comment.

Damodaran called for a reality check on Lyft last week, too.

The ride-hailing company went public last month at $72 per share and a more than $20 billion valuation. But the company should be trading closer to $59 per share, and valued closer to $15 billion, he said. Share prices have come down about 20 percent since the IPO and Lyft was trading at $56 Monday.

“As Lyft’s price moves, so will Uber’s, and I am sure that there are many at Uber (and its investment banks) who are hoping and praying that Lyft’s stock does not have many more days like last Thursday, before the Uber IPO hits the market,” Damodaran wrote in a blog post Monday.

It’s not always the case that an IPO price is higher than value, Damodaran pointed out. In the case of Facebook, his personal valuation was higher than where the company priced in the public markets. And at the “right price, he would buy either ride-hailing company.”

Uber first opened the veil to investors in its filing to go public last week. The company showed slowing revenue growth and an adjusted EBITDA loss of $1.85 billion last year. The company is one of the few tech giants going public this year that has issued self-reported unaudited financials for several quarters.

It has been a complicated one for investors to value. In its S-1 filing, Uber outlined multiple business lines in addition to ride-hailing, and is operating in 63 countries and more than 700 cities. Lyft meanwhile, is focused on transportation only, in just the U.S. and Canada.

In a less enthusiastic market environment, the companies might be valued more reasonably, Damodoran said. He quoted Warren Buffett, who said the markets are “moody” and take advantage of those moods. Right now, the markets are embracing higher valuations.

“I think of the markets as being manic-depressive,” Damodaran said. “When it’s depressed, I buy. When it’s manic I sell.”

— CNBC’s Lora Kolodny contributed reporting.

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