19 ms·

Lyft prices IPO at top of range

287 points by jkw 8y ago

nodesocket 8y ago
I am watching this IPO with keen interest. If it goes well, in terms of market day open to close, perhaps that suggests that the Uber IPO will be a similar success. I also want to participate in the Slack IPO as well.
- danvayn 8y ago
  I dont think I would participate in a slack IPO. More competitors pop up each day and I dont see anything particularly unique about their approach that would keep companies interested in keeping their services. Full disclosure though, I have not used their product in years. Maybe its not as slow and bloated anymore, but I dont see whats stopping another trendy team chat app from coming along and posing a threat by the time they go public.
  - jelling 8y ago
    Slack has a network effect for any user that is part of more than one group. If it's just one group for work, sure, the company could switch and gone is the user. But if that user is part of other groups they will push back against the switch as no one wants more chat windows.
    - zaroth 8y ago
      Who pays the Slack bill? It doesn’t matter if the network effect doesn’t accumulate value toward the entity making the buying decision. What Slack has is a golden brand and a price point that apparently doesn’t make companies look much further than that. It smells a lot like New Relic in that sense. Eventually the pricing catches up and new signups start dwindling and despite a good deal of lock-in companies think about switching.
      - sokoloff 8y ago
        Slack is very nice to use. Users love it. Those who negotiate and pay the bills (like me) are surely keenly watching for any credible competitor to get out from under the fairly "fully priced" (to put it as politely as I can) offering from slack.
        art-vandelay 8y ago
        Have you tried Hangouts Chat?
        sokoloff 8y ago
        We have not. Will have a look.
  - deanmoriarty 8y ago
    Very respectfully, I personally think your comment is very out of touch with reality and might end up having the same accuracy as the one that was criticizing Dropbox for not being particularly unique [1]. Slack is immensely viral, in Silicon Valley it's basically used by almost every single tech person, its network effect is gigantic. When I glimpse at people's phones on public transportation, a large portion of folks are interacting with Slack. And that's not only used in startups, also in massive companies, both big "old" enterprises such as IBM as well as "new" enterprises like several FAANGs. [1] https://news.ycombinator.com/item?id=9224 https://news.ycombinator.com/item?id=9224
    - synaesthesisx 8y ago
      It's funny how many of these massive companies attempted to build internal alternatives that were ultimately abandoned. IBM gave it a shot with Watson Workspace, only to shut it down last month and redirect users to Slack channels. https://help.workspace.ibm.com/hc/en-us/articles/360015622373 https://help.workspace.ibm.com/hc/en-us/articles/36001562237...
    - Q6T46nT668w6i3m 8y ago
      I don't know if you're right, but Dropbox's 52-week high was 43.50 and its low was 18.50. It closed today at $21.72.
  - empath75 8y ago
    I like slack as a company but it’s so trendy I can only imagine price will soon outpace any realistic valuation. I doubt an average investor will be able to buy it at anything close to the ipo price.
  - eeeeeeeeeeeee 8y ago
    It’s the integrations. If Slack keeps pricing about the same and service is stable, people won’t switch. They won’t even switch if a cheaper competitor comes around. Slack only needs to be good enough to keep people stuck.
- xchaotic 8y ago
  Why would I want to be at the end of the food chain, owning a money losing taxi company? What's unique to Lyft, are there at least signs of profitability given the pressure from competition?
- anitil 8y ago
  I thought the not-so-secret about IPO's is that there's nothing 'Public' about them. Ie by the time you can get to them, you're too late.
komali2 8y ago
My friends own a flat in downtown San Francisco, about a 30 second walk from the 4th and King station. They're waiting till the middle of this year to sell because of the expectation of many new millionaires seeking property after the Lyft, Uber, slack, and other IPOs.
- toomuchtodo 8y ago
  Smart money gets out at the top.
  - masayune 8y ago
    Disagree. Smart money is probably already out. There’s no guarantee you can accurately define when the top is. Fortunes are lost when people think they can.
    - toomuchtodo 8y ago
      > Smart money is probably already out. Is it? https://www.mercurynews.com/2019/03/28/bay-area-home-sales-dip-as-prices-continue-to-rise/ https://www.mercurynews.com/2019/03/28/bay-area-home-sales-d...
  - twblalock 8y ago
    > Smart money gets out at the top. People were saying we were at the top 5 years ago, but housing prices are way up since then.
    - toomuchtodo 8y ago
      Yield curve inversion, IPOs Of profitless companies, longest economic stretch without a recession. The cycle has to end at some point. I’m not saying when the recession will happen, I’m saying it will eventually arrive.
      - ummonk 8y ago
        If house prices double between now and then and then drop by 30% it is profitable to buy now. As much as I hope house prices fall below where they currently are some time in the future, I wouldn’t count on it.
throwawaylogs 8y ago
I don't mean to be super negative but I don't see this going well. They are losing a billion a year and have the worst self driving tech. Their self driving tech is built on top of Baidu's open source platform and another open source platform with only 1 year of development with a huge team. A recipe for disaster. They only have 1 year of development and scant few of their technical leaders - including their VP - worked in self driving before starting at Lyft. I don't see how they survive.
- shereadsthenews 8y ago
  They're going to make it up by losing $20 per day on each of a huge fleet of electric scooters.
- ghaff 8y ago
  Door-to-door general self-driving is utterly irrelevant to the financials of any of these companies within a relevant timeframe.
  - zaroth 8y ago
    And yet their financials under current limitations of reality are utter shit. Who would buy this?
    - ghaff 8y ago
      I honestly don't understand why (barring greater fool theory/delusion/etc.) Uber's new CEO didn't just say that prices had to go up 50%-100% (to basically cab fares) to create a sustainable business. It is a better service in many cases after all. If you're not interested in using the service at those prices? Sorry. We don't want you as a customer. There would have been howls of rage from young urbanites who had structured their lives around subsidized transportation. But... Lyft could have contested this but I'm not sure it would have been credible.
      - grandmczeb 8y ago
jedberg 8y ago
A fun lession in dilution: Logan Green and John Zimmer, the co-founders of Lyft, will each have about $500M in stock at $72. (Edit: I miscalculated the holdings of the cofounders at $85M because I didn't account for their class B shares. However, I think my point still stands for the most part). Google holds $900M in Lyft stock. A16Z holds $1B in Lyft stock. GM and Fidelity have $1.3B. Rakuten Europe has $2.2B. $500M is certainly a life-changing outcome, but it's interesting how we value the capital that those companies put in far more than we value the years of work those two put in. Edit 2: To be clear, this isn't a complaint in any way. What A16Z and Google and the rest did for Lyft is highly valuable and worthy of compensation. This is simply a commentary on the relative value of capital vs labor.
- cma 8y ago
  > far more than we value the years of work those two put in. They did all the work, or they hired employees to do lots of it with the capital?
  - jedberg 8y ago
    That's fair. How do we figure out the total employee holdings?
    - nostrademons 8y ago
      The employees got paid in cash, (largely) not stock, because that's the deal they took. Equity investors exist because most people would rather work for cash than for stock. Typically, the way the money flows is that college endowments & pension funds put cash into VC funds in exchange for equity; VC funds put cash into startups in exchange for equity; startups use that cash to pay salaries; and employees who receive those salaries spend a portion on college tuition, gifts to their alma mater, retirement savings, etc. that then gets recycled back into institutional finance. If the startup ends up being worth more than the money put in (either because they turn a profit or because they can convince some greater sucker to take that equity off their hands), the excess is returned to the VC fund in proportion to their ownership stake & liquidation preferences, who take 20% for their GPs and distribute the rest of it back to their LPs, who use it to fund scholarships or buy a new building or pay for your parents' retirement. If you can convince employees to work for you for equity, you don't need VCs at all: you give them shares, and when the company has a liquidity event, everybody benefits. Most people don't take that bargain, though, because they don't have confidence that the equity will be worth anything and need to eat in the meantime. The premium VCs get is precisely because people are risk averse. If all companies were public and everyone were willing to work for equity, that premium would be arbitraged down to nearly nothing, but then we'd probably be complaining about how certain unscrupulous actors managed to convince people to accept equity of their worthless company and now those people can't eat because they were bilked out of just compensation for their labor. (The crypto economy basically functions like this, with various tokens acting as pseudo-equity in the "economy" that grows in value as the surrounding ecosystem grows and these tokens being freely tradeable on exchanges - and it suffers from precisely this failure mode, where it turns out that unforgeable tokens != unbreakable promises.)
klaudius 8y ago
I suggest everyone read Hubert Horan series on NakedCpitalism. Here's the latest article: https://www.nakedcapitalism.com/2019/03/hubert-horan-can-uber-ever-deliver-part-eighteen-lyfts-ipo-prospectus-tells-investors-no-idea-ridesharing-ever-profitable.html https://www.nakedcapitalism.com/2019/03/hubert-horan-can-ube...
cleandreams 8y ago
I'm worried about the impact of collapsing valuations of Lyft and Uber. Out of curiosity, does anyone know what big successful companies have gone public when they were losing large amounts of money? What happened to the stock price?
- jaypeg25 8y ago
  Every biotech ever?
  - Areading314 8y ago
    It's not quite the same since a biotech will often have a patent-enforced monopoly which generates zero-risk profits after the uncertain FDA approval process. These companies usually get acquired quickly after their drugs hit the market
- kaikai 8y ago
  I'm also worried about this rash of IPOs not going well. I wondered if that's why so many companies are suddenly pushing for IPO on a tight deadline, after Uber announced. Once one big unicorn tanks after IPO, future IPOs will probably go poorly.
  - tachyonbeam 8y ago
    It could also be because the stock market has been a little shaky lately, and everyone is expecting a recession is around the corner. IPO and sell the stock now, before the market crashes, rather than during the crash.
- linuxftw 8y ago
  Twitter. Has been a (large) net loss since IPO, just finally started turning a profit. Ultimately, depends on what you mean by success. I don't know of any companies that were VC cash burners, IPO'd, and then delivered great results over the next 5 years. I'd say that some must exist, surely, just don't know which they are.
aboutruby 8y ago
Looks like Uber would be a $90B - $120B valuation, so about ~1/4th of Uber. Uber has ~15 millions daily trips, while Lyft has ~2 million daily trips.
- jvagner 8y ago
  the last few times i took either, the drivers had both uber and lyft apps running in their cars... i wonder what the split and overlap in drivers is between those two companies.
- msoad 8y ago
  Trips in United States are a lot more expensive on average
whoisjuan 8y ago
Just wait one year. After two or three earnings releases its market cap would be under $10B.
josh_carterPDX 8y ago
90% of Lyft drivers work there while having another job or while looking for full time work. At $72 per share I'm sure they can afford to invest in the company they made so valuable. :-/
- MuffinFlavored 8y ago
  uhh... share price isn't what makes Lyft expensive. It's P/E does... because there's no earnings.
  - josh_carterPDX 8y ago
    Agree. However, the point I was trying to make is that a driver could not afford to buy shares even if they wanted to.
    - karlakush 8y ago
      $72 is not prohibitively expensive. Also, buying shares of a company just because you work for them is not always a smart decision. If the company goes under, you will lose your job. Do you really want to lose your savings as well?
- radicalriddler 8y ago
  These days I believe that fractional investing is more common, so firms such as Betterment will allow an investor to purchase half a share and sorts. This doesn't take away from your comment completely though, most Lyft drivers wouldn't have the spare income to invest into the company, it's just not because the share is $72 that they can't invest. But it's because they've pushed so much into this share price, that surely they could've put more money into drivers pay, instead of lining their corporate overlords pockets.
  - josh_carterPDX 8y ago
    Absolutely. If you consider a $40 ride will only yield about $25 for the driver, there is a lot of room to give more to drivers. Sad to see this sort of cash grab by the current Lyft shareholders.
DevX101 8y ago
Anyone else reading the rush to IPOs from so many companies as a leading indicator of a market top?
- jurassic 8y ago
  Absolutely. I won’t be surprised if this craters after the open, long before the rank and file employees get to see a dime.
  - ses1984 8y ago
    I think above poster means it's an indicator of the whole market, not just lyft but other companies suddenly going for the ipo.
- empath75 8y ago
  Yep. Stock market represents selling out to the dumb money. I wouldn’t put a dime into lyft
  - FreedomToCreate 8y ago
    Are you going to short it?
    - xiphias2 8y ago
      Shorting is always dangerous. Put options are safer as they don't have unlimited downside.
      - latencyloser 8y ago
        Just to add, a mildly more conservative/higher probability short would be a short call spread, can adjust the strikes depending on your risk tolerance/confidence. This limits upside but you no longer need to outpace theta, it's working in your favor on the sell side. The long put is more sensitive to timing whereas the short call spread limits upside returns. Trade-off depending on your goals. Edit: not to be confused with a short call, which has unlimited downside risk.
samfisher83 8y ago
How is a company that makes no money in a commodity business worth so much. FB and Google had a monopoly. What moat does Lyft have to justify the valuation (24B)?
- djsumdog 8y ago
  How long do people think Uber and Lyft will continue before they collapse? 5 years? 8? I have a hard time see them still being around 10 years from now. I'm more interested in what will happen after. Will local city Taxi apps fill in the gap? There are a few companies that brand/sell apps for multiple cities that could potentially offer multi-city service. I think eventually, the price of rides will go back to where it was in the pre-Uber Taxi days, or at least fairly close. It will be several years though.
  - luckydata 8y ago
    I think there's a case for those companies surviving like Expedia and Orbitz, a staple of the business they are in but nowhere near the stars we made them out to be. The resizing process will be painful mostly for the rank and file, investors and founders will do alright.
    - samfisher83 8y ago
      Expedia market cap is 17b Lyft is 24b
      - jhall1468 8y ago
        Expedia isn't a growth company, Lyft is. The question at this point becomes whether or not Lyft can make money, and at a scale to be worth that valuation now.
        adventured 8y ago
        It's still an extraordinarily bad mis-pricing even when you account for the growth. Lyft is being given a ~40% valuation premium over Expedia, with 20% of the sales and none of the profit (Expedia generated $842m in operating income last year). What's the growth assumption on Lyft to justify the extreme risk imbalance in that equation? That they're going to do $15-$20 billion in sales within six to eight years? And that even if they manage to accomplish that somehow (while surviving Uber), they might only be worth then what they already are now as their growth inevitably slows considerably (removing the huge growth premium, contracting their sales etc multiple). It seems likely to end in disaster given the wild outcome required to justify the present pricing.
pl0x 8y ago
Congrats to the entire lyft team. Maybe Waymo may acquire them in the future?
blegblarh 8y ago
Does anyone here rely on Lyft or another rideshare for their business? I work for in the healthcare sector and we rely on rideshare quite a bit to ensure our members can reach their doctor's appointment, etc. I would say around 50% of our trips are rideshare and the rest are local transportation companies; While Lyft isn't perfect I can't help but wonder if they are going to alter operations greatly whether it is to phase out their healthcare operations or buy us out. I am curious if anyone has some insight as to how Lyft plans on continuing their operations. Here is a link to some of the services Lyft offers if you are curious: https://www.lyftbusiness.com/healthcare https://www.lyftbusiness.com/healthcare
- mattparmett 8y ago
  Rideshare is certainly important in the healthcare world for NEMT (non-emergency medical transport). Both Lyft and Uber have built out health-related teams and business lines recently to address the NEMT market. [0] Prior to rideshare companies entering this market, there were legacy transportation "brokers" that coordinated and provided NEMT services - the largest and most well-known being Logisticare. Recently, newer companies have been started in the NEMT space. One example is Circulation [1]. These companies may provide transportation services directly, but also sit on top of existing rideshare companies like Lyft. Circulation and Lyft formed a partnership in December 2017 [2]. Circulation was actually recently acquired by Logisticare. So the answer to your question - rather than relying on a single rideshare company for your NEMT, consider using a broker (either old-school or new-school) that diversifies your rideshare exposure and abstracts away the actual rideshare companies from your workflow. (Disclaimer: the VC fund I work for was an investor in Circulation before they were acquired, but we're no longer invested.) [0] https://www.uberhealth.com/ https://www.uberhealth.com/ [1] https://www.circulation.com/ https://www.circulation.com/ [2] https://www.businesswire.com/news/home/20171205005862/en/Circulation-Lyft-Partner-Non-Emergency-Medical-Transportation https://www.businesswire.com/news/home/20171205005862/en/Cir...
- djanogo 8y ago
  "Reduce patient no show rates below the national average. Capture lost revenue from missed medical appointments with reliable rides from Lyft. " Brutally honest on why they are into this business.
justfor1comment 8y ago
I will have to get a driver's license if this thing crashes. I am part of the problem why Lyft and Uber lose so much money. I have been so lucky that Uber and Lyft became ubiquitous just when I was about to get a DL. I decided against the headache and costs of maintaining my own car. Never got a DL and kept using ride sharing services everywhere. Also, kept switching between Uber and Lyft based on who is offering me discounts that week. Seems like my VC funded lifestyle will come to an end if some new investors don't buy the ride sharing story.
- willart4food 8y ago
  I am about to join you.
- kenneth 8y ago
  I hate driving, and I never bothered with getting the driver's license. Eventually, it got to a point where I just felt limited and embarrassed by not having a driver's license, and went took a few classes and dealt with it. I was 24 when I got my driver's license and I've probably driven a dozen times total since then (rental cars in Hawaii, Colorado, or LA mostly). It's really easy, and I feel a lot better for having that ability. I'm 100% glad I did it and added that valuable life skill to my arsenal, despite still hating driving and still almost never using it. I recommend it.
  - ghaff 8y ago
    There are a lot of things you can't do if you can't drive. I was just in Nevada and Death Valley on vacation a few weeks ago. Utterly undoable without either yourself or a companion driving. I suppose you can just shrug and be OK with pretty much staying in or near cities but that seems to close off a lot of options. I also couldn't deal with day-to-day things without a car but that's at least somewhat manageable depending upon where you live and work. ADDED: I'm not a typical Silicon Valley developer to be sure, but I couldn't even have done my first job absent a drivers license. It may be worth asking if you want to be employable outside of certain bubbles where you'll be the weird person who always needs a ride because they can't drive even though they don't have a disability.
hnburnsy 8y ago
Is Lyft losing money because they are offering a service below cost or because they are spending on marketing to acquire and protect market share? One seems unsustainable and one seems manageable.
- gniv 8y ago
  > Is Lyft losing money because they are offering a service below cost or because they are spending on marketing to acquire and protect market share? I would say the latter mostly. See page 17 of their S-1: https://www.sec.gov/Archives/edgar/data/1759509/000119312519059849/d633517ds1.htm https://www.sec.gov/Archives/edgar/data/1759509/000119312519...
  - hn_throwaway_99 8y ago
    How do you make that conclusion based on that data? Lyft's total operating loss is greater than all of their sales and marketing expenses! And I'm assuming all their promos and specials fall in that sales and marketing budget, so if they cut that budget their revenue would tank. Honestly, I like Lyft as a rider, but this feels like a total pump-and-dump. I predict their stock looking like Groupon's trajectory at best.
m0zg 8y ago
Lots of fools are about to reveal themselves and be parted with their money.
dawhizkid 8y ago
I would short out the gate...
warp_factor 8y ago
Uber and Lyft IPOs look to me like they are legal ponzy schemes. Both companies lose a crazy amount of money, they have close to zero moat, customers have no loyalty and will go to another rideshare service if it is one dollar cheaper. The fundamentals don't make any sense, but still we read everywhere that Lyft and Uber at those prices make sense. The VCs and founders decided to get out while the market is up (and while they still can) and they will sell their shares to the "dumb" public that will buy into another overhyped tech stocks without really understanding the fundamentals. The employees cannot sell before 6 months, they are locked out. After a couple weeks the market will probably realize this stock is overvalued and it will start to go down, but at that point all the big fishes will be out already and who will hold those toxic assets? individual investors and employees that cannot yet sell.
- Judgmentality 8y ago
  I agree I don't understand how a company seemingly built on backwards business fundamentals can be valued so highly, but I disagree it will be only a couple of weeks before the market adjusts the price accordingly. I think it will take much longer than that, probably closer to a couple of years of a slow downward trend with lots of volatile spikes.
  - Slartie 8y ago
    I would expect the same, at least for Lyft. Uber is a bit of a different beast. It's valuated much higher, and it banked a lot of that valuation (in my perception at least) on the perspective of getting self-developed fully automated driving capability to the market and thus having an edge (and an actual moat) to be used to finally reach profitability by eliminating the costly drivers. Thus I would expect its valuation to stay high for a while, but drop sharply as soon as the "fully automated driving is right around the corner" bubble pops for real.
- austincheney 8y ago
  Why would anybody want to invest money into a stock that has never been profitable and has no future indication of ever reaching profit? It really just sounds like speculation based on nothing. This reminds me of the bitcoin market.
lordnacho 8y ago
Well I don't want to poop on the parade, but isn't it a little bit thoughtworthy how rewards are distributed in our modern economic system? A company that hasn't made money is making its founders generational wealth, as well as the investors. (Actually is this wrong? Googling seems to suggest they lost money in recent years. Point is the same though.) Lyft might never make money, and yet people involved are making out like bandits. I get that some things will lose money before they make money, and it's not up to me to decide whether a particular thing should be invested in by other people. But it seems if this trend continues, making money becomes more about getting investors to think they're gonna make money than about making a profitable business?
- warp_factor 8y ago
  I was thinking about the same thing. It seems this stock is completely disconnected from the fundamentals and that's what allows it to go so high (And make the founder//VCs rich). If we push this logic to the extreme, what would prohibit a stock to be completely uncorrelated to the company it represents? What if at some point a stock is traded based purely on the hype and the idea that someone else will eventually buy it for even more eventually later on? This seems to be what's going on with this IPO, it is 100% speculation that someone dumber than you will eventually buy it for even more. Back in the days dividends and voting rights were used to keep the stock inline with the company's fundamental, but in this specific case, why is the stock related at all to the company since there are no voting right nor dividends?
sparkling 8y ago
Can anyone explain why Uber needs 16.000+ employees (this figure does not include drivers)? I don't see why the whole operation can't be run by ~1000-2000 people.
dnate 8y ago
I'm not too knowledgeable when it comes to finances. But isn't it possible to bet against a stock? As in someone promising you to buy stock X at price Y at future date Z? So when the stock dips, you make money. If yes, and this is such a clear cut case (again, I know very little about finances, just going of the comments here), shouldn't this be easy money? Hell, I would bet against it if I had any betting money.
- derda 8y ago
  It is called short selling. Don't how/if that works in combination with an IPO.
- deleted 8y ago
  [deleted]
- a13n 8y ago
  Yep, you're talking about buying put options.
- gibybo 8y ago
  >But isn't it possible to bet against a stock? Yes, there are a few ways to do it. >As in someone promising you to buy stock X at price Y at future date Z? So when the stock dips, you make money. This would be either a put option or a future (depending on whether you have the option or the obligation to sell it on date Z), but it carries the risk that the market will not lower the price prior to date Z. Put options also aren't available at the same time as IPO, I believe LYFT puts won't be available until late next week. You can also short the stock, which is simply borrowing shares from someone else, selling them, then buying back the shares at a hopefully lower price to repay the loan at a later date. The advantage is that you don't have to specify a certain date, but you may be forced to pay back the loan earlier than you'd like if the price increases beyond your collateral or more people want to borrow the stock than lend it. >If yes, and this is such a clear cut case The reality is that this isn't actually such a clear cut case. There are many people with billions of dollars at their disposal betting both ways. Some will be right, some will be wrong. The price they (and everyone else) have agreed to bet against each other with will be the market price.
bitxbit 8y ago
I just don’t see how Uber and Lyft survive past autonomous vehicles going mainstream over the next two decades.
bfrog 8y ago
Intuitively I want to short this, but realistically bandwagon buyers will probably drive the price up.
tkris 8y ago
I think a future where Lyft/Uber collude to set prices is not far off. Similar to soda market where coke and Pepsi collide to sell sugar water with 99% gross margins.

287 points by jkw 8y ago

I am watching this IPO with keen interest. If it goes well, in terms of market day open to close, perhaps that suggests that the Uber IPO will be a similar success. I also want to participate in the Slack IPO as well.

danvayn 8y ago
I dont think I would participate in a slack IPO. More competitors pop up each day and I dont see anything particularly unique about their approach that would keep companies interested in keeping their services. Full disclosure though, I have not used their product in years. Maybe its not as slow and bloated anymore, but I dont see whats stopping another trendy team chat app from coming along and posing a threat by the time they go public.
- jelling 8y ago
  Slack has a network effect for any user that is part of more than one group. If it's just one group for work, sure, the company could switch and gone is the user. But if that user is part of other groups they will push back against the switch as no one wants more chat windows.
  - zaroth 8y ago
    Who pays the Slack bill? It doesn’t matter if the network effect doesn’t accumulate value toward the entity making the buying decision. What Slack has is a golden brand and a price point that apparently doesn’t make companies look much further than that. It smells a lot like New Relic in that sense. Eventually the pricing catches up and new signups start dwindling and despite a good deal of lock-in companies think about switching.
    - sokoloff 8y ago
      Slack is very nice to use. Users love it. Those who negotiate and pay the bills (like me) are surely keenly watching for any credible competitor to get out from under the fairly "fully priced" (to put it as politely as I can) offering from slack.
      - art-vandelay 8y ago
        Have you tried Hangouts Chat?
        sokoloff 8y ago
        We have not. Will have a look.
- deanmoriarty 8y ago
  Very respectfully, I personally think your comment is very out of touch with reality and might end up having the same accuracy as the one that was criticizing Dropbox for not being particularly unique [1]. Slack is immensely viral, in Silicon Valley it's basically used by almost every single tech person, its network effect is gigantic. When I glimpse at people's phones on public transportation, a large portion of folks are interacting with Slack. And that's not only used in startups, also in massive companies, both big "old" enterprises such as IBM as well as "new" enterprises like several FAANGs. [1] https://news.ycombinator.com/item?id=9224 https://news.ycombinator.com/item?id=9224
  - synaesthesisx 8y ago
    It's funny how many of these massive companies attempted to build internal alternatives that were ultimately abandoned. IBM gave it a shot with Watson Workspace, only to shut it down last month and redirect users to Slack channels. https://help.workspace.ibm.com/hc/en-us/articles/360015622373 https://help.workspace.ibm.com/hc/en-us/articles/36001562237...
  - Q6T46nT668w6i3m 8y ago
    I don't know if you're right, but Dropbox's 52-week high was 43.50 and its low was 18.50. It closed today at $21.72.
- empath75 8y ago
  I like slack as a company but it’s so trendy I can only imagine price will soon outpace any realistic valuation. I doubt an average investor will be able to buy it at anything close to the ipo price.
- eeeeeeeeeeeee 8y ago
  It’s the integrations. If Slack keeps pricing about the same and service is stable, people won’t switch. They won’t even switch if a cheaper competitor comes around. Slack only needs to be good enough to keep people stuck.
xchaotic 8y ago
Why would I want to be at the end of the food chain, owning a money losing taxi company? What's unique to Lyft, are there at least signs of profitability given the pressure from competition?
anitil 8y ago
I thought the not-so-secret about IPO's is that there's nothing 'Public' about them. Ie by the time you can get to them, you're too late.

komali2 8y ago

My friends own a flat in downtown San Francisco, about a 30 second walk from the 4th and King station. They're waiting till the middle of this year to sell because of the expectation of many new millionaires seeking property after the Lyft, Uber, slack, and other IPOs.

toomuchtodo 8y ago
Smart money gets out at the top.
- masayune 8y ago
  Disagree. Smart money is probably already out. There’s no guarantee you can accurately define when the top is. Fortunes are lost when people think they can.
  - toomuchtodo 8y ago
    > Smart money is probably already out. Is it? https://www.mercurynews.com/2019/03/28/bay-area-home-sales-dip-as-prices-continue-to-rise/ https://www.mercurynews.com/2019/03/28/bay-area-home-sales-d...
- twblalock 8y ago
  > Smart money gets out at the top. People were saying we were at the top 5 years ago, but housing prices are way up since then.
  - toomuchtodo 8y ago
    Yield curve inversion, IPOs Of profitless companies, longest economic stretch without a recession. The cycle has to end at some point. I’m not saying when the recession will happen, I’m saying it will eventually arrive.
    - ummonk 8y ago
      If house prices double between now and then and then drop by 30% it is profitable to buy now. As much as I hope house prices fall below where they currently are some time in the future, I wouldn’t count on it.

throwawaylogs 8y ago

I don't mean to be super negative but I don't see this going well. They are losing a billion a year and have the worst self driving tech. Their self driving tech is built on top of Baidu's open source platform and another open source platform with only 1 year of development with a huge team. A recipe for disaster. They only have 1 year of development and scant few of their technical leaders - including their VP - worked in self driving before starting at Lyft. I don't see how they survive.

shereadsthenews 8y ago
They're going to make it up by losing $20 per day on each of a huge fleet of electric scooters.
ghaff 8y ago
Door-to-door general self-driving is utterly irrelevant to the financials of any of these companies within a relevant timeframe.
- zaroth 8y ago
  And yet their financials under current limitations of reality are utter shit. Who would buy this?
  - ghaff 8y ago
    I honestly don't understand why (barring greater fool theory/delusion/etc.) Uber's new CEO didn't just say that prices had to go up 50%-100% (to basically cab fares) to create a sustainable business. It is a better service in many cases after all. If you're not interested in using the service at those prices? Sorry. We don't want you as a customer. There would have been howls of rage from young urbanites who had structured their lives around subsidized transportation. But... Lyft could have contested this but I'm not sure it would have been credible.
    - grandmczeb 8y ago

jedberg 8y ago

A fun lession in dilution: Logan Green and John Zimmer, the co-founders of Lyft, will each have about $500M in stock at $72. (Edit: I miscalculated the holdings of the cofounders at $85M because I didn't account for their class B shares. However, I think my point still stands for the most part). Google holds $900M in Lyft stock. A16Z holds $1B in Lyft stock. GM and Fidelity have $1.3B. Rakuten Europe has $2.2B. $500M is certainly a life-changing outcome, but it's interesting how we value the capital that those companies put in far more than we value the years of work those two put in. Edit 2: To be clear, this isn't a complaint in any way. What A16Z and Google and the rest did for Lyft is highly valuable and worthy of compensation. This is simply a commentary on the relative value of capital vs labor.

cma 8y ago
> far more than we value the years of work those two put in. They did all the work, or they hired employees to do lots of it with the capital?
- jedberg 8y ago
  That's fair. How do we figure out the total employee holdings?
  - nostrademons 8y ago
    The employees got paid in cash, (largely) not stock, because that's the deal they took. Equity investors exist because most people would rather work for cash than for stock. Typically, the way the money flows is that college endowments & pension funds put cash into VC funds in exchange for equity; VC funds put cash into startups in exchange for equity; startups use that cash to pay salaries; and employees who receive those salaries spend a portion on college tuition, gifts to their alma mater, retirement savings, etc. that then gets recycled back into institutional finance. If the startup ends up being worth more than the money put in (either because they turn a profit or because they can convince some greater sucker to take that equity off their hands), the excess is returned to the VC fund in proportion to their ownership stake & liquidation preferences, who take 20% for their GPs and distribute the rest of it back to their LPs, who use it to fund scholarships or buy a new building or pay for your parents' retirement. If you can convince employees to work for you for equity, you don't need VCs at all: you give them shares, and when the company has a liquidity event, everybody benefits. Most people don't take that bargain, though, because they don't have confidence that the equity will be worth anything and need to eat in the meantime. The premium VCs get is precisely because people are risk averse. If all companies were public and everyone were willing to work for equity, that premium would be arbitraged down to nearly nothing, but then we'd probably be complaining about how certain unscrupulous actors managed to convince people to accept equity of their worthless company and now those people can't eat because they were bilked out of just compensation for their labor. (The crypto economy basically functions like this, with various tokens acting as pseudo-equity in the "economy" that grows in value as the surrounding ecosystem grows and these tokens being freely tradeable on exchanges - and it suffers from precisely this failure mode, where it turns out that unforgeable tokens != unbreakable promises.)

klaudius 8y ago

I suggest everyone read Hubert Horan series on NakedCpitalism. Here's the latest article: https://www.nakedcapitalism.com/2019/03/hubert-horan-can-uber-ever-deliver-part-eighteen-lyfts-ipo-prospectus-tells-investors-no-idea-ridesharing-ever-profitable.html https://www.nakedcapitalism.com/2019/03/hubert-horan-can-ube...

cleandreams 8y ago

I'm worried about the impact of collapsing valuations of Lyft and Uber. Out of curiosity, does anyone know what big successful companies have gone public when they were losing large amounts of money? What happened to the stock price?

jaypeg25 8y ago
Every biotech ever?
- Areading314 8y ago
  It's not quite the same since a biotech will often have a patent-enforced monopoly which generates zero-risk profits after the uncertain FDA approval process. These companies usually get acquired quickly after their drugs hit the market
kaikai 8y ago
I'm also worried about this rash of IPOs not going well. I wondered if that's why so many companies are suddenly pushing for IPO on a tight deadline, after Uber announced. Once one big unicorn tanks after IPO, future IPOs will probably go poorly.
- tachyonbeam 8y ago
  It could also be because the stock market has been a little shaky lately, and everyone is expecting a recession is around the corner. IPO and sell the stock now, before the market crashes, rather than during the crash.
linuxftw 8y ago
Twitter. Has been a (large) net loss since IPO, just finally started turning a profit. Ultimately, depends on what you mean by success. I don't know of any companies that were VC cash burners, IPO'd, and then delivered great results over the next 5 years. I'd say that some must exist, surely, just don't know which they are.

aboutruby 8y ago

Looks like Uber would be a $90B - $120B valuation, so about ~1/4th of Uber. Uber has ~15 millions daily trips, while Lyft has ~2 million daily trips.

jvagner 8y ago
the last few times i took either, the drivers had both uber and lyft apps running in their cars... i wonder what the split and overlap in drivers is between those two companies.
msoad 8y ago
Trips in United States are a lot more expensive on average

whoisjuan 8y ago

Just wait one year. After two or three earnings releases its market cap would be under $10B.

josh_carterPDX 8y ago

90% of Lyft drivers work there while having another job or while looking for full time work. At $72 per share I'm sure they can afford to invest in the company they made so valuable. :-/

MuffinFlavored 8y ago
uhh... share price isn't what makes Lyft expensive. It's P/E does... because there's no earnings.
- josh_carterPDX 8y ago
  Agree. However, the point I was trying to make is that a driver could not afford to buy shares even if they wanted to.
  - karlakush 8y ago
    $72 is not prohibitively expensive. Also, buying shares of a company just because you work for them is not always a smart decision. If the company goes under, you will lose your job. Do you really want to lose your savings as well?
radicalriddler 8y ago
These days I believe that fractional investing is more common, so firms such as Betterment will allow an investor to purchase half a share and sorts. This doesn't take away from your comment completely though, most Lyft drivers wouldn't have the spare income to invest into the company, it's just not because the share is $72 that they can't invest. But it's because they've pushed so much into this share price, that surely they could've put more money into drivers pay, instead of lining their corporate overlords pockets.
- josh_carterPDX 8y ago
  Absolutely. If you consider a $40 ride will only yield about $25 for the driver, there is a lot of room to give more to drivers. Sad to see this sort of cash grab by the current Lyft shareholders.

DevX101 8y ago

Anyone else reading the rush to IPOs from so many companies as a leading indicator of a market top?

jurassic 8y ago
Absolutely. I won’t be surprised if this craters after the open, long before the rank and file employees get to see a dime.
- ses1984 8y ago
  I think above poster means it's an indicator of the whole market, not just lyft but other companies suddenly going for the ipo.
empath75 8y ago
Yep. Stock market represents selling out to the dumb money. I wouldn’t put a dime into lyft
- FreedomToCreate 8y ago
  Are you going to short it?
  - xiphias2 8y ago
    Shorting is always dangerous. Put options are safer as they don't have unlimited downside.
    - latencyloser 8y ago
      Just to add, a mildly more conservative/higher probability short would be a short call spread, can adjust the strikes depending on your risk tolerance/confidence. This limits upside but you no longer need to outpace theta, it's working in your favor on the sell side. The long put is more sensitive to timing whereas the short call spread limits upside returns. Trade-off depending on your goals. Edit: not to be confused with a short call, which has unlimited downside risk.

samfisher83 8y ago

How is a company that makes no money in a commodity business worth so much. FB and Google had a monopoly. What moat does Lyft have to justify the valuation (24B)?

djsumdog 8y ago
How long do people think Uber and Lyft will continue before they collapse? 5 years? 8? I have a hard time see them still being around 10 years from now. I'm more interested in what will happen after. Will local city Taxi apps fill in the gap? There are a few companies that brand/sell apps for multiple cities that could potentially offer multi-city service. I think eventually, the price of rides will go back to where it was in the pre-Uber Taxi days, or at least fairly close. It will be several years though.
- luckydata 8y ago
  I think there's a case for those companies surviving like Expedia and Orbitz, a staple of the business they are in but nowhere near the stars we made them out to be. The resizing process will be painful mostly for the rank and file, investors and founders will do alright.
  - samfisher83 8y ago
    Expedia market cap is 17b Lyft is 24b
    - jhall1468 8y ago
      Expedia isn't a growth company, Lyft is. The question at this point becomes whether or not Lyft can make money, and at a scale to be worth that valuation now.
      - adventured 8y ago
        It's still an extraordinarily bad mis-pricing even when you account for the growth. Lyft is being given a ~40% valuation premium over Expedia, with 20% of the sales and none of the profit (Expedia generated $842m in operating income last year). What's the growth assumption on Lyft to justify the extreme risk imbalance in that equation? That they're going to do $15-$20 billion in sales within six to eight years? And that even if they manage to accomplish that somehow (while surviving Uber), they might only be worth then what they already are now as their growth inevitably slows considerably (removing the huge growth premium, contracting their sales etc multiple). It seems likely to end in disaster given the wild outcome required to justify the present pricing.

pl0x 8y ago

Congrats to the entire lyft team. Maybe Waymo may acquire them in the future?

blegblarh 8y ago

Does anyone here rely on Lyft or another rideshare for their business? I work for in the healthcare sector and we rely on rideshare quite a bit to ensure our members can reach their doctor's appointment, etc. I would say around 50% of our trips are rideshare and the rest are local transportation companies; While Lyft isn't perfect I can't help but wonder if they are going to alter operations greatly whether it is to phase out their healthcare operations or buy us out. I am curious if anyone has some insight as to how Lyft plans on continuing their operations. Here is a link to some of the services Lyft offers if you are curious: https://www.lyftbusiness.com/healthcare https://www.lyftbusiness.com/healthcare

mattparmett 8y ago
Rideshare is certainly important in the healthcare world for NEMT (non-emergency medical transport). Both Lyft and Uber have built out health-related teams and business lines recently to address the NEMT market. [0] Prior to rideshare companies entering this market, there were legacy transportation "brokers" that coordinated and provided NEMT services - the largest and most well-known being Logisticare. Recently, newer companies have been started in the NEMT space. One example is Circulation [1]. These companies may provide transportation services directly, but also sit on top of existing rideshare companies like Lyft. Circulation and Lyft formed a partnership in December 2017 [2]. Circulation was actually recently acquired by Logisticare. So the answer to your question - rather than relying on a single rideshare company for your NEMT, consider using a broker (either old-school or new-school) that diversifies your rideshare exposure and abstracts away the actual rideshare companies from your workflow. (Disclaimer: the VC fund I work for was an investor in Circulation before they were acquired, but we're no longer invested.) [0] https://www.uberhealth.com/ https://www.uberhealth.com/ [1] https://www.circulation.com/ https://www.circulation.com/ [2] https://www.businesswire.com/news/home/20171205005862/en/Circulation-Lyft-Partner-Non-Emergency-Medical-Transportation https://www.businesswire.com/news/home/20171205005862/en/Cir...
djanogo 8y ago
"Reduce patient no show rates below the national average. Capture lost revenue from missed medical appointments with reliable rides from Lyft. " Brutally honest on why they are into this business.

justfor1comment 8y ago

I will have to get a driver's license if this thing crashes. I am part of the problem why Lyft and Uber lose so much money. I have been so lucky that Uber and Lyft became ubiquitous just when I was about to get a DL. I decided against the headache and costs of maintaining my own car. Never got a DL and kept using ride sharing services everywhere. Also, kept switching between Uber and Lyft based on who is offering me discounts that week. Seems like my VC funded lifestyle will come to an end if some new investors don't buy the ride sharing story.

willart4food 8y ago
I am about to join you.
kenneth 8y ago
I hate driving, and I never bothered with getting the driver's license. Eventually, it got to a point where I just felt limited and embarrassed by not having a driver's license, and went took a few classes and dealt with it. I was 24 when I got my driver's license and I've probably driven a dozen times total since then (rental cars in Hawaii, Colorado, or LA mostly). It's really easy, and I feel a lot better for having that ability. I'm 100% glad I did it and added that valuable life skill to my arsenal, despite still hating driving and still almost never using it. I recommend it.
- ghaff 8y ago
  There are a lot of things you can't do if you can't drive. I was just in Nevada and Death Valley on vacation a few weeks ago. Utterly undoable without either yourself or a companion driving. I suppose you can just shrug and be OK with pretty much staying in or near cities but that seems to close off a lot of options. I also couldn't deal with day-to-day things without a car but that's at least somewhat manageable depending upon where you live and work. ADDED: I'm not a typical Silicon Valley developer to be sure, but I couldn't even have done my first job absent a drivers license. It may be worth asking if you want to be employable outside of certain bubbles where you'll be the weird person who always needs a ride because they can't drive even though they don't have a disability.

hnburnsy 8y ago

Is Lyft losing money because they are offering a service below cost or because they are spending on marketing to acquire and protect market share? One seems unsustainable and one seems manageable.

gniv 8y ago
> Is Lyft losing money because they are offering a service below cost or because they are spending on marketing to acquire and protect market share? I would say the latter mostly. See page 17 of their S-1: https://www.sec.gov/Archives/edgar/data/1759509/000119312519059849/d633517ds1.htm https://www.sec.gov/Archives/edgar/data/1759509/000119312519...
- hn_throwaway_99 8y ago
  How do you make that conclusion based on that data? Lyft's total operating loss is greater than all of their sales and marketing expenses! And I'm assuming all their promos and specials fall in that sales and marketing budget, so if they cut that budget their revenue would tank. Honestly, I like Lyft as a rider, but this feels like a total pump-and-dump. I predict their stock looking like Groupon's trajectory at best.

m0zg 8y ago

Lots of fools are about to reveal themselves and be parted with their money.

dawhizkid 8y ago

I would short out the gate...

warp_factor 8y ago

Uber and Lyft IPOs look to me like they are legal ponzy schemes. Both companies lose a crazy amount of money, they have close to zero moat, customers have no loyalty and will go to another rideshare service if it is one dollar cheaper. The fundamentals don't make any sense, but still we read everywhere that Lyft and Uber at those prices make sense. The VCs and founders decided to get out while the market is up (and while they still can) and they will sell their shares to the "dumb" public that will buy into another overhyped tech stocks without really understanding the fundamentals. The employees cannot sell before 6 months, they are locked out. After a couple weeks the market will probably realize this stock is overvalued and it will start to go down, but at that point all the big fishes will be out already and who will hold those toxic assets? individual investors and employees that cannot yet sell.

Judgmentality 8y ago
I agree I don't understand how a company seemingly built on backwards business fundamentals can be valued so highly, but I disagree it will be only a couple of weeks before the market adjusts the price accordingly. I think it will take much longer than that, probably closer to a couple of years of a slow downward trend with lots of volatile spikes.
- Slartie 8y ago
  I would expect the same, at least for Lyft. Uber is a bit of a different beast. It's valuated much higher, and it banked a lot of that valuation (in my perception at least) on the perspective of getting self-developed fully automated driving capability to the market and thus having an edge (and an actual moat) to be used to finally reach profitability by eliminating the costly drivers. Thus I would expect its valuation to stay high for a while, but drop sharply as soon as the "fully automated driving is right around the corner" bubble pops for real.
austincheney 8y ago
Why would anybody want to invest money into a stock that has never been profitable and has no future indication of ever reaching profit? It really just sounds like speculation based on nothing. This reminds me of the bitcoin market.

lordnacho 8y ago

Well I don't want to poop on the parade, but isn't it a little bit thoughtworthy how rewards are distributed in our modern economic system? A company that hasn't made money is making its founders generational wealth, as well as the investors. (Actually is this wrong? Googling seems to suggest they lost money in recent years. Point is the same though.) Lyft might never make money, and yet people involved are making out like bandits. I get that some things will lose money before they make money, and it's not up to me to decide whether a particular thing should be invested in by other people. But it seems if this trend continues, making money becomes more about getting investors to think they're gonna make money than about making a profitable business?

warp_factor 8y ago
I was thinking about the same thing. It seems this stock is completely disconnected from the fundamentals and that's what allows it to go so high (And make the founder//VCs rich). If we push this logic to the extreme, what would prohibit a stock to be completely uncorrelated to the company it represents? What if at some point a stock is traded based purely on the hype and the idea that someone else will eventually buy it for even more eventually later on? This seems to be what's going on with this IPO, it is 100% speculation that someone dumber than you will eventually buy it for even more. Back in the days dividends and voting rights were used to keep the stock inline with the company's fundamental, but in this specific case, why is the stock related at all to the company since there are no voting right nor dividends?

sparkling 8y ago

Can anyone explain why Uber needs 16.000+ employees (this figure does not include drivers)? I don't see why the whole operation can't be run by ~1000-2000 people.

dnate 8y ago

I'm not too knowledgeable when it comes to finances. But isn't it possible to bet against a stock? As in someone promising you to buy stock X at price Y at future date Z? So when the stock dips, you make money. If yes, and this is such a clear cut case (again, I know very little about finances, just going of the comments here), shouldn't this be easy money? Hell, I would bet against it if I had any betting money.

derda 8y ago
It is called short selling. Don't how/if that works in combination with an IPO.
deleted 8y ago
[deleted]
a13n 8y ago
Yep, you're talking about buying put options.
gibybo 8y ago
>But isn't it possible to bet against a stock? Yes, there are a few ways to do it. >As in someone promising you to buy stock X at price Y at future date Z? So when the stock dips, you make money. This would be either a put option or a future (depending on whether you have the option or the obligation to sell it on date Z), but it carries the risk that the market will not lower the price prior to date Z. Put options also aren't available at the same time as IPO, I believe LYFT puts won't be available until late next week. You can also short the stock, which is simply borrowing shares from someone else, selling them, then buying back the shares at a hopefully lower price to repay the loan at a later date. The advantage is that you don't have to specify a certain date, but you may be forced to pay back the loan earlier than you'd like if the price increases beyond your collateral or more people want to borrow the stock than lend it. >If yes, and this is such a clear cut case The reality is that this isn't actually such a clear cut case. There are many people with billions of dollars at their disposal betting both ways. Some will be right, some will be wrong. The price they (and everyone else) have agreed to bet against each other with will be the market price.

bitxbit 8y ago

I just don’t see how Uber and Lyft survive past autonomous vehicles going mainstream over the next two decades.

bfrog 8y ago

Intuitively I want to short this, but realistically bandwagon buyers will probably drive the price up.

tkris 8y ago

I think a future where Lyft/Uber collude to set prices is not far off. Similar to soda market where coke and Pepsi collide to sell sugar water with 99% gross margins.