In the latest Lyft IPO news, the company reported on Oct. 11, 2017, that it has delivered 500 million rides, a milestone that could mean the IPO will happen soon.
While the 500 million rides don't hold a candle to rival Uber's 5 billion rides, the fact is Lyft's market share has been increasing.
And even though Uber may have delivered more rides, Lyft is closer to going public...
The Lyft IPO News Could Mean the Public Offering Is Nearing
Lyft has completed fewer rides than Uber, but Lyft only operates within the United States. In comparison, Uber operates in over 80 countries around the world.
But in the U.S. market, Lyft is stealing Uber's customers...
Uber started 2017 with 80% of the U.S. market share for ride-hailing services, but that figure now sits at around 70%.
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Lyft isn't just adding more customers - it's doing it faster than ever.
It took the company four years to reach 100 million rides. This year, it took the company just three months to reach 100 million.
Now it appears the company is ready to capitalize on this positive news by going public...
The Lyft IPO Date Could Be Set at the Start of 2018
Lyft is in the process of signing an IPO advisory firm, according to a Sept. 28 Reuters report.
The IPO advisor will help Lyft hire its underwriters, who will determine the IPO offering price. Large institutions and hedge funds will be able to buy Lyft stock at the offering price, and then retail investors can buy Lyft stock on the Lyft IPO date.
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Lyft has completed its interviews for an IPO advisory firm and plans to make its selection shortly.
And when Lyft selects its underwriters and goes public, we want Money Morning readers to be prepared.
Before buying Lyft stock, here's what Money Morning Director of Technology & Venture Capital Research Michael A. Robinson wants you to know...
Should I Buy Lyft Stock?
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Robinson doesn't believe retail investors should invest in overhyped IPOs.
"I generally tell retail investors to avoid buying an IPO at the open because the insiders have already made all the money available at the debut," Robinson said.
You see, prices can soar for a few days after a company goes public, which nets early investors the biggest gains. However, retail investors are often buying in at an inflated price, and stock prices after a public offering can be extremely volatile.
But he has one exception...
"My exception to this rule is to put in a limit order that is fairly tight from the offering price. Otherwise, the risk is you buy at the top and then go upside down. That's a big risk to carry with a new issue that hasn't hit the lock-up date," Robinson said.
However, we have one strategy that lets you safely profit from the hype these IPOs create without the risk that can come with buying at the IPO price.
Robinson advises investors to purchase an exchange-traded fund (ETF) that mimics the broader market for IPOs. It's the First Trust U.S. Equity Opportunities ETF Fund (NYSE Arca: FPX).
Because FPX is an ETF, retail investors can buy and sell it just like a stock.
And because FPX holds a mix of recent IPOs, it's diversified. That makes it less risky than owning just one stock.
Because FPX owns more of PayPal Holdings Inc. (Nasdaq: PYPL) (7.28% of its holdings) than SNAP (1.05% of its holdings), for example, it balances out the risk of IPOs. If FPX just owned shares of SNAP, FPX would be down 38.85% so far in 2017. But the PYPL stock price is up 76.84% so far in 2017, and it accounts for a much larger position than Snapchat.
According to FTPPortfolios.com, FPX's holdings include the 100 largest and most recent U.S. public offerings.
It currently holds IPOs that rolled out over the last several years, including Snap Inc. (NYSE: SNAP), Match Group Inc. (Nasdaq: MTCH), and Blue Buffalo Pet Products Inc. (Nasdaq: BUFF). And it also holds newly spun-off companies like AbbVie Inc. (NYSE: ABBV).
This structure lets you profit from IPOs and new public companies without the risk of owning just one stock. And for investors looking to outperform the market with safe investments, FPX is beating the Dow right now.
This year, FPX has climbed 20.92%. In comparison, the Dow is up only 17.76% in the same time.
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