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Wall Street's valuation guru: From Uber to Pinterest, all the major IPOs this year are overpriced

Key Points
  • Lyft, Zoom and Pinterest all priced above their marketed range, while Uber is prepping for what will be this year's biggest IPO, seeking a $100 billion price tag.
  • NYU Stern professor Aswath Damodaran believes their valuations are all too high.
  • "All four are richly priced ... I'm a little scared of Uber at $100 billion. I think both Lyft and Uber are struggling with a way to convert revenue growth into profits. So you are paying $100 billion for a company that still doesn't have a viable business model. That's scary," Damodaran says.
Aswath Damodaran
Source: CNBC

This year's hot IPOs have one thing in common — they are all overpriced, according to one reliable market valuation judge.

Lyft, Zoom and Pinterest garnered much attention with their soaring public debuts after all pricing above their marketed range. Ride-hailing giant Uber is prepping for what will be this year's biggest IPO, seeking a $100 billion price tag. But NYU Stern professor Aswath Damodaran believes their valuations are all too high.

"All four are richly priced," Damodaran said Tuesday on CNBC's "Squawk on the Street. " "I'm a little scared of Uber at $100 billion. I think both Lyft and Uber are struggling with a way to convert revenue growth into profits. So you are paying $100 billion for a company that still doesn't have a viable business model. That's scary."

The valuations for these tech unicorns are based on future profits as almost none of their businesses are profitable yet. They like to play the numbers game, touting eye-popping numbers of riders, drivers and subscribers instead of focusing on the financials, Damodaran said.

"The test will be when Uber goes public, whether the market gets caught up in numbers ... 91 million riders. That's a lot of people. I think all of these companies use numbers to intimidate," he said.

The professor known as "Wall Street's Dean of Valuation" valued Uber at only $60 billion, well below the expected $100 billion or roughly $95 per share that Uber is reportedly seeking. He gave Pinterest a $14 billion valuation, $16 billion for Lyft and $7 billion for Zoom.

"I'd pick Pinterest over Zoom any day, because in terms of pricing, Pinterest is a better bargain than Zoom. Pinterest has the pathway to making money," Damodaran said.

Shares of Pinterest have gained 8% since its IPO Thursday, pushing its market cap to nearly $14 billion.