We have Lyft Off!?

Hey all,

So Lyft IPO’d recently to continue with all the ride hailing news coming out of MENA and the US.

Shares soared on it’s debut,  rising as much as 23% at one point,

The stock opened at $87.24 but later pared gains to close up 8.7 percent at $78.29, giving Lyft a market capitalization of around $22.2 billion.

But this doesn’t get away from the fact that it burned $911 million in 2018.  that’s almost $60 million a month.  To put it in perspective, Careem , last i heard, was burning $10 million a month in 2018.

But look how Lyft’s valuation has grown:

June 2012 – launched

March 2013 – $275m

March 2014 – $700m

March 2016 – $5.5b

March 2017 – $6.9b

March 2018 – 11.7b

March 2019 – $22.2b (IPO)

However, it’s already looking a tad bleak, as its stock hit the brakes in a major way.

Is the market saying ‘hey, actually you’re not a money making company?  Why the hell you IPOing??’

“In order to justify its current market valuation, investors need to take a big leap of faith that the millennials and later generations will forego ownership of a car and opt instead for reliance on a ridesharing service,” Seaport said in an investor note.

WHAAAT!

That’s a big leap of faith imo.  With no clear path to profitability, is this just an arbitrage game for investors..or worse still, fancy ponzi scheme?

CNBC has a point, and maybe we should be worried about this trend of loss making companies going public.  Essentially, it’s my opinion, that sometimes, with no other reasonable ‘exit’ for investors, especially with a time frame that they can swallow, IPOing is the only way out!

BR,

RB

 

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