Next Investors logo grey

Top Gear: LYFT to debut on the NASDAQ

Published 29-MAR-2019 16:05 P.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

Lyft has won the drag race, as predicted.

Uber’s biggest competitor will debut on the NASDAQ this Friday (GMT-4) after raising more than US$2 billion Thursday afternoon at US$72 per share. 32.5 million shares were made available during the offer.

J.P. Morgan, Credit Suisse and Jefferies were the lead underwriters.

Founded in 2007 by CEO Logan Green and President John Zimmer, Lyft’s IPO comes off the back of proactive market approach.

Expansion into Canada and more US cities has led to 35% US market share – well up on the 22% it held in January 2017.

The company will likely trade under the ticker ‘LYFT’.

Buy: yes or no?

The IPO proves to be unique for several reasons.

Aside from being the first rideshare company to go public, Lyft will have the largest net loss of any pre-IPO business in history: it posted more than US$900 million in losses (on US$2.2 billion revenue) in 2018.

That’s a lot of cash.

However, the company is raking in the third largest revenues for a pre-IPO company, behind only Google and Facebook.

It’s this fact that has seen a swathe of buy ratings from leading analysts.

One such analyst is Tom White of D.A. Davidson, “[Lyft] is deftly maximising the benefits by aggressively differentiating its brand/mission around socially-conscious values and corporate responsibility.

“This is good PR, but also good for business,” White said.

“Near-term, LYFT’s ability to reduce incentives for drivers and riders (critical tools for creating balance in its ride-sharing marketplace) will be a key lever to its near-term profitability outlook.”

White expects Lyft to increase revenue by 54% (to US$3.4 billion) this year, and by another 30% in 2020.

“Our LYFT valuation framework assumes the company achieves ~31% bookings share of this opportunity by 2029 (vs. an estimated 15% share today),” he explained.

Could a lack of investment in autonomous driving harm LYFT?

MKM Partners analyst Rob Sanderson does not share White’s enthusiasm, citing the company’s lack of investment in autonomous driving as a major weakness moving forward.

“We believe this is much more significant than a taxi-substitute, that transportation will become a service for many customers (if not most) and that transportation networks will become increasingly automated in the future,” he wrote.

“Different strategy on geographic expansion and adjacencies is important, but we think strategy and execution towards and autonomous fleet will be a more critical success factor over the long term.”

Sanderson also pointed to Uber’s imminent listing and size advantage (over Lyft) as other reasons to exercise caution.

Of course, caution should also be adopted as all of these valuations are speculative and, really, anything could happen. Potential Investors should consider the Offer document in deciding whether to acquire the securities.

Uber is valuated at US$120 billion and is backed by over 90 investors including Toyota and Amazon founder/CEO Jeff Bezos.

It remains on track to launch its IPO in 2019.



General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.