The Lyft IPO is finally here, but it might not be worth all of the buzz.
However, 2019 is a big year for startup "unicorns" and big tech IPOs. And like Pinterest, Uber, and Airbnb, Lyft has been one of the most hyped-up IPOs since its announcement on March 1.
But some of Wall Street's excitement is understandable.
Since 2012, Lyft has built a solid foundation for investor confidence by focusing on customer satisfaction.
Beyond that, in the last two years alone, Lyft's services have grown and now account for 29% of the ride-sharing market in the United States and Canada.
Not only that, but Carl Icahn, legendary hedge fund manager, promised Lyft $100 million in investments.
This Could Be the Most Profitable Dollar You Ever Spend: Tom Gentile's Cash Course covers all the essential trading ideas you need to know to potentially make thousands in extra income every week. Get access for $1...
Plus, with Lyft's acquisition of the biggest bike-sharing firm in the United States, Motivate, it's also moving into the scooter and dockless bicycle market. It's even committed $100 million toward New York's public bicycle network.
However, while Lyft is a massive ride-sharing company, it's not alone. And it's definitely not the largest.
For one, Lyft is in competition with the ride-sharing giant Uber.
Not only that, but there are a few obstacles to watch out for in its journey to success.
However, fortunately for Lyft, there is a silver lining.
Back in 2017, Uber's founder and CEO, Travis Kalanick, resigned after several scandals involving sexual harassment and poor management decisions.
Once 2018 rolled around, Uber found itself in a legal battle with Alphabet Inc. (NASDAQ: GOOGL). The company had been accused of stealing self-driving vehicle technology - which was resolved through a settlement of $70 billion worth of firm equity and $245 million in cash.
Even with a valuation of $120 billion, Uber is still waist-deep in drama. Both state and city governments have also accused the ride-sharing firm of implementing hidden software to thwart authorities from enforcing legal regulations.
So even if Uber's struggles continue, Lyft faces even bigger issues ahead.
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Hype or not, Lyft's numbers don't say many good things.
Beyond that, Wall Street's eagerness to jump on the Lyft IPO left it oversubscribed. Shares were originally going to release around $75, but as of this morning, they're now officially $72.
This means investors will be dishing out more cash than banks think the Lyft IPO is worth. And it's not a great value when you look at all of the other red flags surrounding Lyft.
Lyft's services and vision are commendable, but hopes and dreams don't make a company successful.
Right now, it's operating at a $900 million loss on revenue of $2.2 billion.
To Lyft's credit, $300 million was in research and development. However, that still leaves $600 million in overall losses.
On top that, shareholders have no say.
The company has a dual-class stock, giving the founders all super-voting B shares with 20 votes each.
On the other hand, regular investors will have one vote for every share they own. This makes it so executives have full control while shareholders sit idly by.
So, while Wall Street is foaming at the mouth over Lyft, cleverer investors see the red flags from miles away.
And sure, the Lyft IPO has hype going for it with a valuation of a little over $20 billion, but investors might not want to jump up on this startup "unicorn."
Honestly, Money Morning cannot recommend the Lyft stock. While there are some positives, there are many more reasons to let this IPO be a hard pass.
Luckily, there are better IPOs lurking around that could bring a gust of big profits...
Tom Gentile's seven-day Cash Course covers all the essential trading ideas you need to know to get the most out of your potential profits in 2019.
And not only will Tom review the basics, he'll share dozens of his most lucrative secrets to potentially start collecting anywhere from $1,190, $1,313, and even $2,830 in consistent income - each and every week.
All of this and more can be yours for only $1.
Click here to learn more...
Follow Money Morning on Facebook and Twitter.
