"When you enter a technology cycle, value investors get confused by the apparent high valuation of the stocks, because they underestimate the wave of innovation that's coming," he said.
To make that happen, Uber China raised $1.2 billion in funding, which included investment from Uber Global and its existing partner Baidu, at an apparent $7 billion valuation.
Mr. Loeb and his advisors disagree with this assessment and point to the cash flows and multi-year earnings growth generated by Herbalife and its apparent low valuation to historic P/E ratios, among other things.
Alibaba invested in Paytm at an apparent billion dollar valuation earlier this year, and now MobiKwik is the latest to be flushed with new cash.
The souring on alternative platforms to Facebook and traditional advertising has been made increasingly apparent as Twitter's valuation has dropped off a cliff.
"Excess investment capital flowing into the sector from nontraditional investors, looking to capitalize on apparent momentum, is pushing valuations and operating costs for young companies past the point of sustainability in many cases," he said.
Still, the Shanghai-based startup recently secured an undisclosed Series E, vaulting its valuation to an apparent $5 billion, up from $3 billion in late 2016.
Both multiples are far lower than those of smaller lenders in India and Indonesia that are perceived to have better growth prospects or less suspect accounts.These modest valuations, and the apparent determination of the Chinese government to offer support come what may, means that the banks will probably still be able to raise some capital from outside.
Instead, we saw a lot of smaller deals involving early-stage companies, a few purchases at apparent markdowns from private market valuations and some larger transactions in the mix.
