InputsCompany's current statusWhat was the total grossed by your company in the most recent twelve months?$1,500.00What revenues did your company generate in the most recent twelve months?$300.00What operating profits (losses) did your company report in that twelve-month period?$10.00Overall MarketWhat is the size of the potential market? (In millions of US $)$100,000.00What is the expected growth rate over the next decade in this market?6.00%Company's share of that marketWhat (eventual) market share do you see the company getting of the potential market?10.00%When do you expect the company to get to this market share?10What will the gross receipts will accrue to the company as revenues?20.00%How much incremental revenue do you expect for every dollar of incremental investment?Minimal capital needs, small acquisitions (5.00)If direct input of incremental investment, enter the number here5.00ProfitabilityWhat is the expected operating margin (in steady state)?40.00%What is the effective tax rate on your income?30.00%RiskWhat cost of capital would you assign to this company, ignoring surivival risk?Ninth decile of US companies (12%)If direct input, what is the cost of capital you would like to use initially (first 5 years)?What cost of capital would you assign to established players in this business?Median of US companies (8%)If direct input, what is the cost of capital you would like to use in steady state (after year 10)?What is the probability that the company will fail sometime in the next 10 years?10%What return on capital do you see the company generating in steady state?90th percentile (ROIC=25%)General inputsWhat is the risk free rate?2.50%What is the statutory tax rate for the country in which the company in incorporated?40.00%Do you want me to use this as the effective tax rate in steady state?YesValuation SummaryValue of the operating assets =$5,894.89Imputed multiple of current revenues =19.65

Aswath Damodaran:This is the gross receipt from the customers who use Uber for their transportation. These receipts are shared between Uber and the car driver. The most recent estimate was of $1.2 billion but since it is a few months old, I scaled it up to reflect the company's rapid growth.Aswath Damodaran:Uber has taken a 20% cut of the gross receipts. The most recent estimate was of $220 million, but I scaled up this up as well to reflect growth.Aswath Damodaran:I have absolutely no idea, and I am probably being generous in assuming that the company is making money.Aswath Damodaran:Stitched together from some real estimates (US taxi & limo market in 2013 was $11 billion, UK market was $9 billion, Tokyo alone is $22 billion) and guesstimates for the rest of the world.Aswath Damodaran:Much of this growth is coming from under served cities in emerging markets, but some of it is from Uber expanding the taxi market by letting unlicensed cabs (people with cars and capacity to ferry others) into the market.Aswath Damodaran:The market share will reflect your assessment of several variables:1. The efficiency of the status quo or producers/consumers: The existing taxi market has been place for decades and is regulated in most big cities, with cities restricting new entry into the business in return for setting fares and charging entry fees. Under the existing system, cab drivers get a relatively small share of the taxi revenue pie (5-10%) and customers in many cities (which are under served) either find themselves without taxis or have to wait a long time. Thus, both cab drivers and customers may be open to different models.2. Competition: Uber uses technology to deliver transportation to customers, but it is not the only company that is doing so. Other competitors like Lyft aad Hailo also do what Uber does and they have their own deep pocketed investors.3. Regulation: The cities where Uber and its competitors are trying to generate their revenues are regulated at the moment, and the the existing players (taxi owners, taxi drivers in traditional companies, city regulators) will make it difficult for the competition. These difficulties will affect the speed with which disurption occurs in these markets and increase the costs with Uber having to accept regulatory oversight in return for entering the business.Aswath Damodaran:See the comment on market share. Same forces will affect this speed.Aswath Damodaran:See the comment on market share. Same forces will affect how much of the taxi receipts accrue to Uber. To the extent that taxi drivers may be able to play Uber off against Lyft and Hailo, this number will come under downward pressure.Aswath Damodaran:If you entered direct input, enter the sales to capital ratio that you want to use. To give you a sense of what this ratio looks like, I have a spreadsheet with industry averages in this workbook.Aswath Damodaran:The higher this number, the less capital investment is needed to expand this business. Right now, Uber and its competitors don't own the cars that the drivers use and the bulk of the investment is in technology infrastructure (R&D). As Uber grows, it may have to acquire new technologies and upstart competitors. The median value for technology companies on this is about 2.50. A really high number would be about 10.00.Aswath Damodaran:This is the profit that Uber is left with from its slice of revenues, after it pays for the expenses associated with generating these revenues. These include the costs of Uber employees in the different cities, the marketing costs (including special deals) that are used to generate new customers, any local fees/costs that have to be paid to the locations (where the services are offered) and general and administrative cost with Uber as a company.Aswath Damodaran:Since Uber generates revenues outside the US, I have left this below the marginal tax rate for the US.Aswath Damodaran:This cost of capital is for the operating risk in Uber. One of the risks is that the company is young and may not survive but don't incorporate that into the cost of capital. Instead, build it into the probability of failure a few cells below this one.Aswath Damodaran:Again, check out industry averages to get an indication (see worksheet)Aswath Damodaran:This is the estimate of the cost of capital once the company becomes a mature company. That will not be until ten years from now.Aswath Damodaran:Check out industry averages, if direct input.Aswath Damodaran:This will be higher fora. Young companies b. Money-losing companiesc. Companies with limited capital accesssd. Companies that have fixed expense commitments (either debt or debt like)Your assessment of the management quality will also go into this input. A serial entrepreneur who has successfully navigated these difficult waters before may be assigned a lower probability of failure.Aswath Damodaran:This is used to set up your company's reinvestment needs after year 10. The higher this number, the less it will hav to reinvest and the higher the terminal value.Aswath Damodaran:This is the risk free rate in whichever currency you chose to do your valuation in.Aswath Damodaran:This is the tax rate of the country where the company is domiciled.Aswath Damodaran:The answer will depend on whether the country of domicile has a global tax model (like the US) where all income eventually gets taxed at the domestic tax rate or a regional tax system and whether you think this company will eventually pay these taxes.

ValuationBase12345678910Terminal yearOverall market$100,000.00$106,000.00$112,360.00$119,101.60$126,247.70$133,822.56$141,851.91$150,363.03$159,384.81$168,947.90$179,084.77$183,561.89Share of market (gross)1.50%3.63%5.22%6.41%7.31%7.98%8.49%8.87%9.15%9.36%10.00%10.00%Revenues as percent of gross20.00%20.00%20.00%20.00%20.00%20.00%20.00%20.00%20.00%20.00%20.00%20.00%Annual Revenue$300.00$768.50$1,172.76$1,527.85$1,845.88$2,136.59$2,407.85$2,666.05$2,916.44$3,163.31$3,581.70$3,671.24Operating margin3.33%7.00%10.67%14.33%18.00%21.67%25.33%29.00%32.67%36.33%40.00%40.00%Operating Income$10.00$53.80$125.09$218.99$332.26$462.93$609.99$773.16$952.70$1,149.33$1,432.68$1,468.50Effective tax rate30.00%31.00%32.00%33.00%34.00%35.00%36.00%37.00%38.00%39.00%40.00%40.00%- Taxes$3.00$16.68$40.03$72.27$112.97$162.02$219.60$286.07$362.03$448.24$573.07$587.40After-tax operating income$7.00$37.12$85.06$146.72$219.29$300.90$390.39$487.09$590.68$701.09$859.61$881.10Sales/Capital Ratio5.005.005.005.005.005.005.005.005.005.00- Reinvestment$93.70$80.85$71.02$63.61$58.14$54.25$51.64$50.08$49.37$83.68$88.11Free Cash Flow to the Firm-$56.58$4.21$75.71$155.68$242.76$336.14$435.45$540.60$651.72$775.93$792.99Terminal value$14,417.95Present value of FCFF-$50.52$3.36$53.89$98.94$137.75$171.52$201.27$227.98$252.61$278.48Present value of terminal value$5,174.60Cost of capital12.00%12.00%12.00%12.00%12.00%12.00%11.20%10.40%9.60%8.80%8.00%Cumulated cost of capital =1.12001.25441.40491.57351.76231.95972.16352.37122.57992.7863Imputed Return on capital25.00%PV of cash flows during next 10 years =$1,375.28PV of terminal value =$5,174.60Value of operating assets$6,549.88Probability of failure10%Adjusted value of operating assets$5,894.89

Breakeven tablePotential market (in millions of US$)$50,000$100,000$150,000$200,000$250,000$300,000Target Market Share (in %)5.00%$1,545$2,995$4,445$5,895$7,345$8,7957.50%$2,270$4,445$6,620$8,795$10,970$13,14410.00%$2,995$5,895$8,795$11,694$14,594$17,49412.50%$3,270$7,345$10,970$14,594$18,219$21,84415.00%$4,445$8,795$13,144$17,494$21,844$26,19417.50%$5,170$10,245$15,319$20,394$25,468$30,54320.00%$5,895$11,694$17,494$23,294$29,093$34,893Potential market (in millions of US$)$100,000$200,000$300,000Uber's share of gross receipts5%$1,818$3,556$5,29410%$5,895$6,269$9,36015%$4,536$8,982$13,47220%$5,895$11,694$17,49425%$7,254$14,407$21,561

Market sizesTaxi & Limo MarketNew York2500000United States11000000United Kingdom9000000Tokyo22000000Global100000000

US Industry averagesIndustry nameNumber of firmsAnnual Average Revenue growth - Last 5 yearsPre-tax Operating MarginSales/CapitalAverage effective tax rateCost of capitalEV/SalesAdvertising656.29%11.54%3.766.04%6.80%1.91Aerospace/Defense952.60%11.13%5.9715.03%6.95%1.53Air Transport257.74%6.60%2.1413.79%5.88%1.06Apparel703.27%12.95%1.7810.29%7.73%2.22Auto & Truck269.97%3.34%2.324.71%6.76%0.90Auto Parts753.06%7.45%3.549.43%8.61%0.86Bank76.99%0.00%0.2922.17%4.45%5.18Banks (Regional)7217.50%0.00%0.2618.00%4.50%5.06Beverage476.92%17.75%1.593.95%8.73%3.02Beverage (Alcoholic)192.69%20.23%0.7010.72%7.28%4.69Biotechnology34914.17%16.91%0.791.13%7.80%10.72Broadcasting303.13%24.41%1.1313.21%8.43%4.14Brokerage & Investment Banking497.96%0.59%0.1913.44%4.42%5.66Building Materials371.77%6.35%2.4716.33%7.71%1.37Business & Consumer Services1793.45%9.51%2.6813.41%6.35%1.68Cable TV166.86%18.61%1.2615.00%6.13%2.73Chemical (Basic)471.50%10.01%1.546.27%6.91%1.65Chemical (Diversified)104.24%9.38%1.9025.03%7.99%1.51Chemical (Specialty)1008.76%15.25%2.1112.74%7.05%2.17Coal & Related Energy454.17%2.70%0.732.44%6.93%1.64Computer Services1293.87%9.78%6.249.94%6.62%1.13Computer Software2738.59%26.73%1.836.16%7.61%4.55Computers/Peripherals66-1.20%18.60%2.395.66%7.98%2.00Construction180.49%6.19%0.959.82%6.57%3.17Diversified2022.98%13.77%0.3912.60%4.64%4.07Educational Services407.73%8.23%1.8911.84%8.07%1.26Electrical Equipment1354.58%12.66%2.877.49%7.81%2.12Electronics1911.07%8.25%1.557.52%7.28%1.60Electronics (Consumer & Office)2616.78%6.46%2.398.97%8.14%1.02Engineering563.94%4.48%4.8914.86%7.83%0.60Entertainment85-1.37%19.81%1.574.85%7.76%3.00Environmental & Waste Services10812.46%11.62%1.715.02%7.16%2.18Farming/Agriculture2912.62%2.40%3.099.01%5.63%0.41Financial Svcs.7610.81%9.85%0.2118.37%5.29%6.91Financial Svcs. (Non-bank & Insurance)173.22%0.14%0.129.77%4.23%8.65Food Processing974.90%10.75%2.6314.00%6.08%1.64Food Wholesalers180.63%4.00%6.9310.69%7.80%0.54Furn/Home Furnishings36-0.39%7.33%2.7310.03%7.94%1.18Healthcare Equipment19311.30%20.30%1.515.80%6.46%2.88Healthcare Facilities475.16%10.76%1.5413.49%5.95%1.44Healthcare Products5822.82%10.65%1.448.76%7.07%3.26Healthcare Services1267.41%4.99%8.8313.77%6.10%0.57Heathcare Information and Technology1256.62%13.02%1.686.09%7.13%3.62Heavy Construction461.01%9.71%1.6219.40%8.26%1.42Homebuilding32-3.54%8.80%1.226.68%8.73%1.68Hotel/Gaming896.47%15.76%0.7410.48%7.23%3.44Household Products1397.01%16.43%2.489.51%7.08%2.50Information Services714.45%24.23%2.2617.05%6.40%4.40Insurance (General)262.95%13.04%0.5619.19%5.80%1.59Insurance (Life)277.09%8.54%0.8517.82%6.28%1.33Insurance (Prop/Cas.)538.42%14.35%1.0119.42%5.53%1.36Internet software and services33012.49%18.91%1.214.59%7.63%6.99Investment Co.658.42%6.83%0.336.62%4.85%5.29Machinery1415.43%12.07%2.5613.02%7.09%1.87Metals & Mining134-0.00%14.28%1.061.90%7.45%2.09Office Equipment & Services30-3.24%8.27%3.0912.81%6.66%1.17Oil/Gas (Integrated)8-2.82%12.61%1.8420.55%7.22%1.22Oil/Gas (Production and Exploration)4119.37%22.49%0.216.29%7.69%6.10Oil/Gas Distribution8010.85%7.95%1.404.18%5.32%1.91Oilfield Svcs/Equip.1639.78%5.69%3.5310.73%8.35%0.70Packaging & Container2410.38%9.29%2.3521.28%5.96%1.26Paper/Forest Products215.47%7.20%1.928.20%7.18%1.18Pharma & Drugs13819.49%24.76%1.184.30%7.61%3.97Power1062.90%17.06%0.5516.03%4.54%2.74Precious Metals16660.95%11.65%0.410.82%7.93%2.40Publshing & Newspapers520.72%9.24%3.1613.92%6.85%1.57R.E.I.T.4623.69%0.29%0.032.48%3.34%32.89Railroad105.16%30.74%0.6520.51%7.10%3.88Real Estate (Development)225.89%8.18%0.253.00%6.79%7.07Real Estate (General/Diversified)11-10.83%8.37%0.178.72%5.66%12.03Real Estate (Operations & Services)47-2.04%9.14%0.988.56%7.81%2.57Recreation708.46%14.11%1.598.81%8.14%2.28Reinsurance322.40%8.25%0.9413.34%4.55%1.05Restaurant845.32%15.05%1.3815.17%6.31%2.88Retail (Automotive)308.11%5.47%3.1419.23%6.88%0.85Retail (Building Supply)76.03%9.86%2.2921.97%7.31%1.50Retail (Distributors)8711.30%9.32%1.9016.18%6.37%1.54Retail (General)213.31%5.28%3.4825.03%6.53%0.72Retail (Grocery and Food)210.97%3.00%4.0622.83%5.77%0.51Retail (Internet)472.54%4.37%8.959.80%7.55%3.31Retail (Special Lines)1374.20%7.02%2.4218.90%7.05%1.11Rubber& Tires42.95%7.01%3.6915.21%6.77%0.54Semiconductor1043.85%15.65%1.247.30%7.97%2.80Semiconductor Equip51-3.01%6.65%1.165.13%8.18%2.42Shipbuilding & Marine14-0.82%7.68%0.664.99%7.99%2.37Shoe147.22%12.67%2.4319.82%6.53%2.44Steel37-2.45%4.38%2.0214.13%6.94%0.84Telecom (Wireless)284.25%3.65%0.7011.54%5.04%2.79Telecom. Equipment1313.73%18.71%1.326.90%7.90%2.84Telecom. Services827.19%12.27%1.268.40%5.92%1.98Thrift2238.47%-0.23%0.0218.93%3.19%66.04Tobacco123.55%40.07%3.1714.23%6.45%4.57Transportation227.86%5.91%2.8721.21%7.08%1.48Trucking280.08%9.05%1.3827.93%6.32%1.56Utility (General)20-2.40%17.48%0.5629.93%4.15%2.63Utility (Water)2011.93%29.10%0.3414.52%5.12%4.78Total Market77666.88%10.57%0.7510.32%6.06%2.52

Global industry averagesIndustry nameNumber of firmsAnnual Average Revenue growth - Last 5 yearsPre-tax Operating MarginSales/CapitalAverage effective tax rateCost of capitalEV/SalesAdvertising2435.04%8.30%3.8717.09%8.24%1.60Aerospace/Defense2074.86%9.38%4.6413.25%8.10%1.40Air Transport1577.67%5.10%1.3015.59%6.76%1.11Apparel11706.38%12.24%1.5714.75%7.74%1.78Auto & Truck1296.71%5.71%1.5513.90%7.60%0.92Auto Parts6096.04%6.61%2.6318.98%8.90%0.78Bank5808.98%0.24%0.1018.14%5.02%9.84Banks (Regional)9476.44%0.00%0.2419.85%5.21%4.12Beverage1076.04%14.34%1.6910.40%8.00%2.42Beverage (Alcoholic)2096.88%19.97%0.9318.10%6.97%3.55Biotechnology70711.03%15.58%0.862.91%8.96%9.58Broadcasting1344.12%16.46%1.1717.82%9.35%2.78Brokerage & Investment Banking5214.59%0.43%0.1811.69%5.38%5.98Building Materials4145.37%6.63%1.7418.24%7.39%1.15Business & Consumer Services7147.52%7.81%3.0117.75%7.35%1.39Cable TV6310.40%18.29%1.2015.62%7.18%3.17Chemical (Basic)7356.09%8.81%1.4515.40%8.22%2.68Chemical (Diversified)842.78%7.39%1.7022.63%8.60%1.16Chemical (Specialty)6818.57%11.30%1.5717.61%7.79%1.62Coal & Related Energy32215.68%5.92%1.566.27%8.49%0.99Computer Services9396.29%7.55%4.2117.30%7.80%1.03Computer Software10597.96%22.73%1.8911.78%8.73%4.05Computers/Peripherals316-0.84%10.55%3.1411.98%9.04%1.20Construction4776.24%11.08%0.9914.84%6.80%1.72Diversified3417.97%8.63%1.0014.26%6.23%1.57Educational Services1618.79%9.01%1.6114.13%7.65%1.60Electrical Equipment8634.67%6.85%2.0913.53%8.32%1.29Electronics11672.29%5.40%2.0013.29%8.55%0.97Electronics (Consumer & Office)1852.59%3.29%2.4813.96%8.49%0.59Engineering11676.18%4.03%2.4416.25%7.50%0.62Entertainment3522.02%17.23%1.479.04%8.28%2.81Environmental & Waste Services3128.64%8.97%1.8611.45%8.23%1.74Farming/Agriculture3418.82%3.95%1.8213.19%6.49%0.78Financial Svcs.5489.27%7.36%0.0617.33%4.57%13.99Financial Svcs. (Non-bank & Insurance)13319.67%3.97%0.1412.60%5.21%7.55Food Processing12017.16%8.09%2.0916.40%6.67%1.39Food Wholesalers1152.07%3.07%5.8417.20%6.41%0.37Furn/Home Furnishings3193.04%6.64%2.8816.03%7.51%0.91Healthcare Equipment4487.64%18.37%1.508.83%7.58%2.86Healthcare Facilities17012.96%10.56%1.3016.65%6.04%1.77Healthcare Products15916.82%12.59%1.4512.66%7.56%3.02Healthcare Services32212.41%4.86%7.3117.26%6.94%0.58Heathcare Information and Technology2788.13%11.93%1.577.88%9.02%3.25Heavy Construction3353.60%6.31%1.5517.11%8.16%1.16Homebuilding1643.48%6.57%1.1916.65%8.89%1.22Hotel/Gaming6489.11%11.94%0.9912.36%7.20%2.60Household Products4588.81%14.73%2.1314.13%7.28%2.47Information Services1776.21%23.19%2.3317.57%7.40%4.18Insurance (General)2359.69%8.75%1.7113.95%6.16%0.81Insurance (Life)12112.08%8.67%1.7118.80%7.91%0.95Insurance (Prop/Cas.)2197.94%10.97%1.3815.06%6.24%1.00Internet software and services7069.58%19.33%1.348.65%9.31%6.76Investment Co.433-2.32%13.93%0.346.96%6.49%4.97Machinery12702.08%8.67%1.8017.45%8.43%1.50Metals & Mining16919.15%13.48%0.913.58%9.34%1.88Office Equipment & Services1610.82%7.00%2.1617.66%6.43%1.06Oil/Gas (Integrated)536.66%10.32%1.6524.53%8.80%0.80Oil/Gas (Production and Exploration)117212.46%22.69%0.316.93%9.46%4.50Oil/Gas Distribution19911.09%7.99%1.179.63%7.41%1.96Oilfield Svcs/Equip.5939.00%4.17%3.5513.98%8.31%0.58Packaging & Container3986.04%7.53%1.7617.72%6.59%1.15Paper/Forest Products3032.19%5.63%1.0312.53%6.55%1.18Pharma & Drugs82012.16%21.09%1.1713.54%7.66%3.59Power74312.80%11.80%0.6714.72%5.94%1.86Precious Metals118129.33%9.60%0.542.16%9.84%2.21Publshing & Newspapers3900.47%7.76%1.7015.19%7.30%1.57R.E.I.T.4920.47%1.21%0.032.32%4.06%32.55Railroad544.64%19.33%0.5425.54%6.02%2.76Real Estate (General/Diversified)4223.78%16.33%0.3113.99%7.00%3.59Real Estate (Development)64713.65%22.49%0.5017.32%5.09%6.77Real Estate (Operations & Services)48111.14%29.41%0.2112.90%6.26%6.19Recreation2862.77%11.46%1.2617.48%7.68%1.84Reinsurance3713.21%11.07%1.3210.81%7.37%0.83Restaurant3045.91%10.88%1.6321.05%6.79%2.05Retail (Automotive)1489.04%4.71%2.9718.79%6.79%0.75Retail (Building Supply)504.20%8.02%2.0226.05%7.31%1.25Retail (Distributors)8485.91%3.55%1.9919.04%6.12%0.67Retail (General)2298.91%4.88%2.7623.63%7.22%0.75Retail (Grocery and Food)1746.59%4.04%3.4226.17%5.97%0.61Retail (Internet)1189.44%4.93%6.7513.55%10.14%3.19Retail (Special Lines)5434.59%6.76%2.4320.75%7.96%1.17Rubber& Tires936.75%9.77%1.8120.06%8.15%0.94Semiconductor5592.98%13.80%1.439.04%10.41%1.81Semiconductor Equip263-0.13%4.54%1.039.61%9.72%2.41Shipbuilding & Marine3563.58%6.06%0.7212.58%6.91%1.65Shoe928.24%9.46%2.3920.41%8.01%1.71Steel7141.63%3.39%1.3812.97%7.53%0.80Telecom (Wireless)1168.86%15.91%0.9715.35%7.31%2.29Telecom. Equipment5254.09%9.25%1.949.56%9.19%1.75Telecom. Services3177.03%13.81%1.0612.92%6.30%1.84Thrift2819.30%1.04%0.0218.73%3.85%60.82Tobacco539.63%28.64%2.4420.52%6.27%3.52Transportation22811.70%7.83%1.7220.49%6.95%1.36Trucking1911.87%6.33%1.5123.30%6.21%1.08Utility (General)554.05%10.53%1.0725.18%5.09%1.27Utility (Water)979.67%28.16%0.3715.09%6.42%4.43Total Market409066.86%8.63%0.7813.80%6.85%1.98

Input choicesYes or NoCost of capitalReturn on capital (in stable growth)ReinvestmentYesLowest decile of US companies (7%)Match the best (ROIC=40%)Minimal capital needs, no acquisitions (10.00)No25th percentile of US companies (7.5%)90th percentile (ROIC=25%)Minimal capital needs, small acquisitions (5.00)Median of US companies (8%)75th percentile (ROIC=20%)Service company median (3.00)75th percentile of US companies (10%)50th percentile (ROIC=12.5%)Technology company median (2.50)Ninth decile of US companies (12%)25th percentile (ROIC = Cost of capital)US company median (2.00)Direct input10th percentile (ROIC =5.00%)Capital intensive company median (1.50)Direct input

Sheet2