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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

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.
        jhall1468 8y ago
        But this is what institutional investors want. They want to see hyper-growth and high burn rates to increase revenue and market share above all else. But I think anyone that suggests a certain outcome in the market is "likely" is making some enormous assumptions. I wouldn't invest in a high-risk IPO like this, but the outcome isn't "likely" to end in disaster. Lyft is spending an enormous amount of money on R&D and new market entry. Analysts have for years told us how a valuation at IPO is "never" going to work and been proven wrong time and time again. As a result, I treat both Lyft's potential as I do analyst recommendations: with a grain of salt.
- trevor-e 8y ago
  When I was in Spain on vacation we had to use the myTaxi app. It doesn't have all the bells and whistles that Uber/Lyft apps have, but it got the job done and the prices were reasonable.
jeremyjh 8y ago
The network effects aren't very important for these companies. Their technology is not a moat, they have no critical patents. They burned most of their VC money selling dollars for $.75. Revenues are high, which only means they lose money fast. I won't be surprised if they lose half their value in three months.
- hn_throwaway_99 8y ago
  When Austin voters kicked Uber and Lyft out of the city a couple years ago (before the state leg. overruled the city), RideAustin, a local non-profit, sprang up. RideAustin definitely had some growing pains, but now I never have issues with the app, and I prefer to use them because (a) they are local, (b) they do a "round-up" giving program for a charity I support and (c) my understanding is the drivers keep a larger share. They've certainly suffered since Uber and Lyft came back to Austin, but they have showed that if Uber and Lyft went away tomorrow it would be trivial to fill their place.
screye 8y ago
Shorting Lyft right now might be a great idea. (as great as it can be for someone with lay person knowledge of a company) I think it may be the company with the largest IPO, that is still this neck deep in losses.
- samfisher83 8y ago
  Its a new stock so it might be expensive to borrow.
dehrmann 8y ago
It's duopoly, not a commodity business.

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.
      - jhall1468 8y ago
        But this is what institutional investors want. They want to see hyper-growth and high burn rates to increase revenue and market share above all else. But I think anyone that suggests a certain outcome in the market is "likely" is making some enormous assumptions. I wouldn't invest in a high-risk IPO like this, but the outcome isn't "likely" to end in disaster. Lyft is spending an enormous amount of money on R&D and new market entry. Analysts have for years told us how a valuation at IPO is "never" going to work and been proven wrong time and time again. As a result, I treat both Lyft's potential as I do analyst recommendations: with a grain of salt.
trevor-e 8y ago
When I was in Spain on vacation we had to use the myTaxi app. It doesn't have all the bells and whistles that Uber/Lyft apps have, but it got the job done and the prices were reasonable.

jeremyjh 8y ago

The network effects aren't very important for these companies. Their technology is not a moat, they have no critical patents. They burned most of their VC money selling dollars for $.75. Revenues are high, which only means they lose money fast. I won't be surprised if they lose half their value in three months.

hn_throwaway_99 8y ago
When Austin voters kicked Uber and Lyft out of the city a couple years ago (before the state leg. overruled the city), RideAustin, a local non-profit, sprang up. RideAustin definitely had some growing pains, but now I never have issues with the app, and I prefer to use them because (a) they are local, (b) they do a "round-up" giving program for a charity I support and (c) my understanding is the drivers keep a larger share. They've certainly suffered since Uber and Lyft came back to Austin, but they have showed that if Uber and Lyft went away tomorrow it would be trivial to fill their place.

screye 8y ago

Shorting Lyft right now might be a great idea. (as great as it can be for someone with lay person knowledge of a company) I think it may be the company with the largest IPO, that is still this neck deep in losses.

samfisher83 8y ago
Its a new stock so it might be expensive to borrow.

dehrmann 8y ago

It's duopoly, not a commodity business.