Furthermore, Buffett explained, “Whenever you buy a stock … you should be able to take out a one-page sheet of paper and say: ‘I am buying the General Motors Company at $56 billion because.’ If you can’t write that out, then you ought to go onto something else. If you’re buying groceries, buying anything else, you can answer that question. But if you can’t answer it on something you’re involving your savings in for however many years for, why should you be doing it?”
Based on his explanation, Buffett did not find good reason to join the bandwagon of investors who are bullish on Uber’s IPO. He believes that some investors are buying into an IPO because of the hype and they want to catch up with others who are getting wealthy because of it. He emphasized that is not a good basis for an investment.
Uber’s IPO is one of the most anticipated this year. The ride-sharing company expects to start offering its stocks between $4 and $50 per share. It is seeking to raise up to $9 billion from its trading debut, bringing its market valuation at around $84 billion.
