Is it early to be talking about investing in a Lyft IPO?
I say…
It’s never too early.
Yes, there is no Lyft stock symbol yet (I’ll take a wild guess it will be LYFT).
And, yes, Lyft isn’t a public traded company YET.
As I am writing this, it seems as if an IPO of both Lyft and Uber is on the horizon.
(This page will be updated with important news about Lyft and a potential Lyft IPO.)
When is Lyft’s potential IPO’s date? Can you currently invest in Lyft even though it isn’t public? Should you even invest in the IPO?
Below you will find the answers to these important questions.
Related: Uber Stock – Should you Invest in the IPO?
Latest Lyft IPO News
How to invest in Lyft BEFORE the IPO
This is not common knowledge, but…
There is currently an opportunity to invest in Lyft.
Unfortunately, for many reading this article, you won’t qualify to invest in Lyft since you must be an accredited investor.
Fortunately, for the accredited investors out there, you already can potentially invest in Lyft.
What is an accredited investor?
Not sure what an accredited investor is? Wondering if you are an accredited investor who can invest in Lyft?
An accredited investor is:
“…a person or entity that can deal with securities not registered with financial authorities by satisfying one of the requirements regarding income, net worth, asset size, governance status or professional experience.”
Source: Investopedia
Requirements to be an accredited investor:
“To be an accredited investor, a person must demonstrate an annual income of $200,000, or $300,000 for joint income, for the last two years with expectation of earning the same or higher income. An individual must have earned income above the thresholds either alone or with a spouse over the last three years….A person is also an accredited investor if he has a net worth exceeding $1 million, either individually or jointly with his spouse.”
Source: Investopedia
If you don’t fall into this income bracket or possess the net worth to be considered an accredited investor, you will just need to wait for Lyft to IPO.
How can accredited investors invest in Lyft?
Accredited investors can invest in Lyft through a company called…
EquityZen
Through EquityZen, an accredited investor has access to invest in Lyft before its IPO.
Below is an infographic from EquityZen regarding Lyft:
If you are an accredited investor interested in a Lyft pre-IPO investment, EquityZen may be able to make that possible.
For those not interested in a pre-IPO investment, read on…
Establish a brokerage account if you haven’t done so
M1 Finance
In order to buy stock in Lyft (or any company) you will need to establish a brokerage account.
If you have not done this yet, it is a good idea to start purchasing stock in companies and/or ETFs and index funds now as opposed to later.
One robo-advisor you may want to look at is M1 Finance.
Why M1 Finance?
The company allows you to purchase stock and charges you NO commission or fee for an account.
To learn more about M1 Finance click here or the button below: M1 Finance Investing
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TD Ameritrade
If you are not looking for a robo-advisor app, a traditional brokerage account such as TD Ameritrade may be for you.
TD Ameritrade has low fees for trading. It will cost $6.95 for commision to buy stock with the company, which is reasonable as long as you are not a hyperactive trader.
You can learn more about opening a brokerage account by clicking here or the button below:
To learn more about TD Ameritrade click here or the button below: Invest with TD Ameritrade
I WANT TO LEARN MORE ABOUT TD AMERITRADE
When will there be a Lyft IPO?
I personally believe the potential for a Lyft IPO within the next two years is high.
It has been reported that Lyft has already been in talks with prospective investment banks.
In my opinion, a major catalyst of the Lyft IPO is the fact that Uber will likely have its initial public offering next year.
According to the CEO of Uber, Dara Khosrowshahi, Uber will likely be going public as soon as 2019.
My thought is Lyft will aim to go public BEFORE Uber, not after.
Why might Lyft try to IPO before Uber?
IPO’s are all about hype – the more hype perceived, the greater the market will often value an IPO.
The spectacle around an Uber IPO will be hyped like you wouldn’t believe.
While Lyft will have quite some hype to their IPO, I doubt it will receive the attention Uber will receive.
If Lyft goes public after Uber, it may seem like a much-dampened IPO on a comparative scale. That could lead to a perception of a less important company, and a lower IPO valuation.
So, for the Lyft IPO, my theory is…
Uber will go through an IPO in 2019-2020, and Lyft will attempt to IPO before Uber.
This is just my theory – take it with a grain of salt.
Should you invest in the Lyft IPO?
When the time comes, should you invest in the Lyft IPO?
My opinion is…
No. Because I just don’t like IPOs.
Like I mentioned above, IPOs are all about hype.
The more hype an investment bank can create on their “roadshow”, the higher potential price they can IPO, or the higher the initial rise in the stock price on the market.
It is the name of the game, and it is why investment banks are paid so much.
In the article I wrote about the Uber IPO, I mentioned a piece by Reuters of the 15 mega IPOs done before 2014.
Guess how those 15 mega IPO’s did?
One year after the 15 mega IPOs (this includes Facebook, Twitter, etc…) 11 of them lagged.
In fact, if you invested in Twitter during their IPO, you have done horribly.
So, should you invest in a Lyft IPO?
Just from the standpoint of the pitfalls of IPOs – I’m personally not interested.
Have I not convinced you yet?
We can talk about Lyft’s financials and how the company stands today.
Lyft’s financials
Lyft is a tech company, and, like many tech companies, Lyft isn’t profitable.
Don’t get me wrong…
Not all companies must be profitable for them to have potential.
Amazon wasn’t profitable for a very long time and look how that turned out.
But there IS an added risk to a company that isn’t profitable.
Lyft doesn’t publicize financials
Lyft is a private company, and it is not required to publicize its financials.
Unlike a publicly traded stock on the stock exchange, Lyft has no obligation to provide you and me with financial information unless we are private investors in the company.
Lucky for you and I, some Bloomberg reporters got their hands on Lyft’s financials a few months ago, and this is what they look like.
Lyft is not profitable
As mentioned above, it is not a shocker that Lyft is not profitable.
While Lyft had net revenue of $708 million in 2016, it lost $606 million.
Lyft’s profit and loss is interesting, but perhaps most interesting is that…
Lyft is projecting profitability.
In fact, by 2019, Lyft anticipates a PROFIT of $500 million.
Going another year out to 2020, that profit could be $1 billion.
To put this into perspective, as you can see in the infographic above from EquityZen, Lyft’s last round of fundraising valued the company at over $11 billion.
If Lyft can generate a $1 billion profit by 2020 and sells for $11 billion, it would put Lyft at a PE of 11 in 2020.
Of course, these numbers are non-GAAP, but still…
If Lyft is really able to increase its revenue, expand profit margins, and decrease its spending, it could potentially lead to a profitable company.
I’d say if Lyft reaches profitability, it would have a lot higher PE ratio 11.
If Lyft averaged a PE of 50 in 2020 and the company did meet that $1 billion profit, Lyft would be a $50+ billion company in 2020 (assuming it was GAAP).
Currently, Uber is valued at around $70 – $80 billion according to its last round of fundraising.
Whether this makes sense or not, we will see…
Will you invest in the Lyft IPO?
I personally think it will be difficult for Lyft to turn a profit of -$606 on revenue of $708 million to a profit of $1 billion on revenue of $6 billion.
But, what do you think?
When will we see a Lyft stock symbol, and will it be worth investing in?
Are you bullish on investing in Lyft?
Are you looking forward to a Lyft IPO?
I’m interested in hearing your thoughts in the comments below!
Disclaimer: These are the ideas and opinions of the author. The author is not responsible for the actions of those who read the posts on this blog. Each individual reader has a unique situation and unique needs. This blog is not intended to solve those unique situations of the readers. This blog is not liable for decisions made by the readers of this blog.
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