Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
Login My Member Benefits Archives Research Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    ×
  • Subscribe
Enter stock ticker or keyword
×
5 Ways to Beat the Fed (and Crush Inflation)
Twitter
Tags: ipos

The Lyft IPO Is Now Official - Here's Whether It's a Buy

By Alexander Bird, Associate Editor, Money Morning • March 8, 2019

Start the conversation

Comment on This Story Click here to cancel reply.

Or to contact Money Morning Customer Service, click here.

Your email address will not be published. Required fields are marked *

Some HTML is OK

The long-awaited Lyft IPO is finally official. It's sure to be the first blockbuster IPO of 2019, but investors should look past the hype to see if the company is worth buying.

On March 1, Lyft announced it filed paperwork with the SEC in anticipation of an initial public offering.

Most of Wall Street didn't bat an eye - both Lyft and its rival Uber have been dropping hints of imminent public offerings for months.

However, there's still one question hanging over the Lyft IPO: is Lyft stock a buy?

Today, we're taking a close look at whether Lyft stock belongs in your portfolio...

The Pros and Cons of Buying Lyft Stock

One of the main reasons investors have been apprehensive of picking up the company's stock when it goes public is the company's valuation.

[Trending] Four of the hottest IPOs are set to hit in 2019 - find out how to profit as demand for new cannabis stocks heats up. Click here...

Lyft is significantly smaller than its chief rival, Uber. Lyft is aiming for a valuation of around $20 billion, while Uber boasts a $120 billion valuation. That puts Lyft at about a quarter of its rival's valuation.

And while the Lyft valuation by itself won't tell us if the stock is worth a buy, it shows us just how much smaller Lyft is than its rivals. In such a competitive environment, buying into the smaller competitor could be risky.

However, Lyft has a major card up its sleeve.

Sign up for SMS so you never miss special events, exclusive offers, and weekly bonus trades.

You see, over the last few years, Uber has been plagued by the kind of scandals that threaten to undermine any market return Uber could generate when it goes public.

Last year, Uber was wrapped up in a battle with Silicon Valley giant Alphabet Inc. (NASDAQ: GOOGL) after Alphabet accused Uber of stealing key elements of the company's self-driving technology.

Rather than fight the charges, Uber agreed to settle the charges for $245 million out of pocket and over $70 billion worth of the company's equity.

And that's not the worst of it. In early 2018, Uber CEO Travis Kalanick was forced out of his executive position at Uber after countless accusations of poor management and sexual harassment.

If that weren't enough, Uber is still attempting to ward off accusations from various city and state governments that the company has used deceptive software to mislead public law enforcement bodies.

In short, Uber has a long way to go until the company becomes the darling of Wall Street some of its most ardent supporters want it to be.

In the meantime, Lyft has been able to maintain investor confidence and open new investment opportunities in its run-up to going public.

Lyft has already locked in a $100 million investment from legendary hedge fund manager Carl Icahn, giving the company increased legitimacy among the Wall Street establishment.

And while neither Lyft nor Uber are currently profitable, Lyft maintains stronger ratings of driver and consumer satisfaction and is aggressively growing its market share.

In fact, over the last two years, the company has gone from just 15% of the ride-sharing market to 29% in 2018.

That kind of growth suggests that Lyft has plenty of room to run when it comes to expansion. And that could mean aggressive returns for shareholders down the line.

In addition, Lyft currently operates in just two countries: the United States and Canada. According to reports, the company plans to expand into a wide range of foreign markets over the next year.

That's before considering the company's other growth strategies.

Lyft owns Motivate, the country's largest bike-sharing company. Through Motivate, Lyft intends to expand its operations to the dockless scooter and bicycle market.

In addition, the company has also announced plans to invest more than $100 million into New York City's public bike network, one of the largest in the nation.

In short, Lyft has a lot going for it as its IPO nears, and it might be better to invest in Lyft instead of Uber. But there are still some major red flags.

The company isn't close to profitability, faces stiff competition from Uber and other rivals, and faces regulatory hurdles as local governments crack down on the rideshare economy.

Uber and Lyft may both be forced to raise prices to get profitable, too. Higher prices could lead to fewer rides and customers opting for cheaper forms of transportation, including going back to the old-fashioned yellow cab.

Lyft remains a speculative play, and if its IPO price is reasonable, it might be worth a flier. But we wouldn't pay too much to access this company's lackluster returns.

Instead, we're turning to one of the most explosive markets in the world right now...

These 4 Companies Could Unleash Up to $12 Billion in New Wealth by Jan. 31

Join the conversation. Click here to jump to comments…

Login
guest
guest
0 Comments
Inline Feedbacks
View all comments


Latest News

May 27, 2023 • By Garrett Baldwin

postcards from the florida republic - may 27

May 26, 2023 • By Garrett Baldwin

Here's Your (Surprising) Best Bet in a U.S. Default

May 26, 2023 • By Shah Gilani

earnings
The Five Things You Need to Know Before Buying Any Stock
Trending Stories
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Profit Takeover This Is VWAP Penny Hawk Trading Today Midday Momentum Pump Up the Close
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Night Trader Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Extreme Profit Hunters Profit Revolution Warlock's World Quantum Data Profits Live Trading Alliance Trade The Close Inside Money Trader Expiration Trader Flashpoint Trader Darknet Hyper Momentum Trader Alpha Accelerators Weekly Profit Cycles Brutus Alerts Resource Traders Alliance

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information

wpDiscuz