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User/Subscriber Economics: An Alternative View of Uber's Value

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  • Aswath DAMODARAN

Abstract

This article compares two valuation approaches applied to value a company whose transport services are used by subscription-based users. The company under valuation is Uber, headquartered in San Francisco, California, USA, operating in 633 cities around the world. The two valuation approaches applied in this research are, on the one hand, a traditional approach, known by valuers and used in most business valuation cases - the discounted cash flow analysis, and, on the other hand, a less-known modern method - the user/subscriber-based model, which argues that it is better suited to businesses operating in the context of the new economy, where their value could be generated by its users/subscribers, rather than its infrastructure and return on investment.

Suggested Citation

  • Aswath DAMODARAN, 2016. "User/Subscriber Economics: An Alternative View of Uber's Value," The Valuation Journal, The National Association of Authorized Romanian Valuers, vol. 11(2), pages 4-29.
    • Handle: RePEc:vaj:journl:v:11:y:2016:i:2:p:4-29
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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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