by Howard Haykin

Not all investments can be winners. One can only hope that … (i) we select more winners than losers; (ii) in the long run our investments appreciate in value; and, (iii) we have the sense or backbone to sell off investments that appear to have little, if any, upside potential. [See Turning a Small Loss into a Bigger Loss.]

PAYPAL is an American company operating a worldwide online payments system. In May, PayPal bought $500 million worth of Uber stock (at the IPO price of $45 a share), betting that the multinational ridesharing company would grow significantly.

Since then, Uber shares have fallen significantly – and continue to fall - hitting their low point in early November. At that point, with Uber trading at $25.58 a share, PayPal had an unrealized loss of $216 million on its $500 million investment. Needless to say, it’s got to be uber-tough to lose 43% of an investment after just 6 months.

What's worse is that ... (i) prospects for Uber remain clouded, as the company continues to report disappointing earnings; and, (ii) February 2020 is the earliest that PayPal can unload its Uber shares, should it seek to cut its losses.