Is Lyft really worth $19 billion?
Share to linkedinLyft’s IPO is set to price tonight and the stock should start trading on Friday after a market clearing price has been determined. The proposed maximum share price is $68, which would value the company at $19.3 billion, but there are reports that itLyft and other disruptive on-demand ridesharing companies have taken advantage of almost everyone having a smartphone and the Gig revolution. Combine those with the cost of owning a car, which the U.S.
Lyft is the typical early stage tech company who is following the tradition of growing rapidly and losing a lot of money . While its gross margins more than doubled from 18.9% in 2016 to 42.4% in 2018, the operating expenses of $1.88 billion were almost as much as the company’s total revenue of $2.16 billion.Lyft’s cash flows show a better story than its operating losses.
The one thing I can saw for certain is that the company’s actual results will not match what my or the analyst's models show four years from now. Nonetheless, it is a worthwhile exercise to see what is needed to get beyond breakeven.Tom White at D.A. Davidson initiated coverage of Lyft with a Buy rating and $75 price target. He wrote, “Our BUY rating reflects LYFT’s impressive recent U.S.
· LYFT’s business is all predicated on incentives to Drivers, and incentives to Riders. Can LYFT have a Business Model without incentives is not clear.· 2018: $2.16 billion, up 103%· 2021: $7.63 billion, up 27%· 2020: 45.8%· 2019: $ millionMy model and assumptions · Without getting into the details, operating expenses as a percent of revenue grow less than revenue by 22%, 13%, 12% and 12% in 2019, 2020, 2021 and 2022, respectively· Only $1 million per year in taxes since the company has over $3 billion in losses, which will increase
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