Steer Clear Or Jump on Board the Lyft IPO? Investors Need to Study the Fine Print, Review the Numbers and Read History

Steer Clear or Jump on Board the Lyft IPO? Investors need to study the fine print, review the numbers and read history

Ridesharing Lyft will soon begin trading as a public • Lyft’s losses are getting worse: Lyft generated company, at a market value expected to exceed $22 a net loss of $911 million in 2018, compared billion, and it jump-starts a run of other tech IPOs in with losses of $687 million and $683 million in 2019, including Uber, Pinterest, Palantir, Postmates, 2017 and 2016 Slack and others. • Lyft will concentrate voting power with And the value of Lyft is being hotly debated from Wall founders Logan Green and John Zimmer, with Street to Main Street. Is Lyft the next Facebook, Green having 29.3% of the voting power and Twitter or Google? Or the next Pets.com or Zimmer having 19.5% eToys.com? What’s it really worth? • “We have a history of net losses, and we may not be able to achieve or maintain profitability And for the most cynical: is this the beginning of the in the future,” Lyft said in its filing next dot.com bubble? Let’s examine each side of the Lyft model, with a sprinkle of historical trends thrown Jump on Board the Lyft IPO in for perspective: • Lyft doubled its net revenue in 2018 as it Steer Clear of the Lyft IPO posted revenue of $2.2 billion last year, up from $1.1 billion in 2017 and $343 million in • Of the “high-valued” tech-companies 2016 considering going public this year (Lyft, Uber, Pinterest and Slack), none have made money • The company’s bookings, which represent the since their founding total dollar value of spending through Lyft services, climbed to $8.1 billion from $4.6 • Uber has raised and lost more money faster, billion in 2017 and $1.9 billion in 2016 and at a higher valuation, than any startup in U.S. history • Lyft said 18.6 million people took at least one ride in the last quarter of 2018, up from 6.6 • During the first three quarters of 2018, a new million in late 2016 record of 83% of U.S. listed companies lost money in the year prior to their IPO. The • Lyft is laser-focused compared to bloated earlier record? Well that was set in 2000, just Uber because Lyft is mainly in the U.S. in before the dot.com bubble popped. about 300 cities, whereas Uber is in close to 70 nations

• Estimates by the Japanese company Rakuten, an investor in Lyft, said Lyft had a 39% share of the ride-sharing market in the United States, up from 22% in 2016

To Lyft or Not to Lyft? Every investor needs to make decisions based on their own personal situation, that much is clear. But the Lyft IPO does seem to mirror a cycle we saw right before the dot.com bubble burst in 2000.

Will Lyft live up to its lofty mission statement to “improve people’s lives with the world’s best transportation” or crash headlong into a wall?

That’s a tough one to answer and only time will tell. In the meantime, if you’re thinking of investing in Lyft, make sure you understand your shareholder rights, the Lyft business model, Lyft’s balance sheet, its competitors and have an appreciation for historical market trends.

Because George Santayana was right when he said, “those who fail to learn from history are condemned to repeat it.”