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.
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!