If you most aggressively value @Uber from its only known revenue model

Today there is news that Uber is doing a whopping $400 million funding at a reported valuation of $12B. Previously I wrote about those who were saying even that is very low and Uber is actually worth $100 billion.

Let us consider the only known source of revenue and its current lines of business – 20% cut from taxi fares. Let us do a very aggressive (overly optimistic) market size and share estimate.

1. 2013 US market size of taxi cabs is $11B
2. Assume rest of the world is another $11B – unlikely just by sheer sizes of economies, standard of living and purchasing power parity
3. Assume a 5 year cumulative annual growth rate (CAGR) of 5% – aggressive because the GDP is not growing as much and income is not growing as much.
4. Uber’s share of this revenue grows from current 10% to 50%
5. Uber’s net profit margin grows from 20% to 30%
6. Say current P/E is 136 (matching $12 billion valuation)
7. But its 5 year P/E can’t be more than 20 – since all the growth is factored in and share of market is frozen its P/E cannot be any more than historical S&P P/E ratio

That is in five years, if this most optimistic scenario plays out, Uber will be worth $16.85 billion. A nice 40% return on your $400 million investment today.

But …

• is the current P/E is so high, isn’t that already building in all future growth?
• how likely is to gain and maintain 50% market share – that is every other taxi ride is through Uber

If the valuation is based on potential of the platform, on not yet demonstrated revenue model, then why stop at $100 billion, give going up and make it the size of world’s economy.