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Lyft, Uber, Pinterest: There are Internet unicorns really worth billions?


AirBnB, Lyft, Uber and logos Pinterestcopyright image
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This week was another sign the US stock market.

Lyft, trip-grad company sold its shares to the public for the first time, predicting a march "unicorns".

The flow of these companies – which are defined as private, venture-backed companies valued at more than $ 1 billion – is set to, including competing Uber LYFT in online scrapbook Pinterest companies and house-sharing site AirBnB.

And they attract some stunning assessment. Uber, for example, can cost as much as $ 120 billion, if it floats.

For LYFT, whose shares are listed on the Nasdaq Stock Market at $ 72 each, giving it a market value of more than $ 24 billion – more than five times the size of, say, British High Street tall Marks & Spencer.

But unlike M & S, which has been around for over a hundred years, Lyft seven years – and this is to make profits.

"I did a lot of research on private venture capital companies, with the support," said Ilya Strebulaev, a finance professor at Stanford University.

"We believe that an average of unicorns is overvalued by about 50%."

If investors stay away?

Lyft is making some big claims in its initial public offering (IPO) prospectus.

Its business model is based on the idea that having a car with a & # 39 is expensive and, as urbanization is growing, people are moving from the ownership of means of transport for the use of the services to get around.

He says that in the US alone, households spend more than $ 1.2 trillion a year by car. Lyft This award comes after.

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LYFT to founder John Zimmer (left) and Logan Green with & # 39 billionaires are following flotation

Rhett Wallace, founder and CEO of Triton Research, said that there is merit in LYFT business model. "The idea that you should not have a car that you do not use 95% of the time, and to maintain and insure and garage … transportation can be performed better than Detroit has given us."

However, transportation as a service to the & # 39 is a charging industry.

Meanwhile White, senior analyst at DA Davidson, said: "There is not a ton of evidence yet that this is happening on any large scale."

There are some data showing the shift, he said. For example, the proportion of 18-year-old American license to drive, has fallen from 76% in 1986 to 62% in 2016, according to the Department of Transportation.

But the wide vehicle ownership data "indicates that this is not really having much more massive blow."

Then there LYFT loss.

Between 2016 and 2018, its revenues have grown strongly from $ 343m to $ 2.1bn. However, its loss has jumped from $ 682 million to $ 911m.

Uber is also loss-making, although this figure decreased from $ 2.2 billion in 2017 to $ 1.8 billion last year.

Professor Strebulaev say that, as a rule, venture back unprofitable businesses "because they generally sacrifice profits in order to achieve a very high growth or scale."

But "the question is really for everyone, and for investors," he said, "or & # 39 is a business model LYFT and Ub allows them to convert these very significant loss in profits in some time … and will the market sustain these losses . "

It feels like familiar territory. It is almost 20 years since the height of the dotcom boom, and its messy consequences.

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share price a sharp cry-it has declined since floating in March 2017

Mr Wallace said: "We had a small taste of what the collapse of the dot-com looks at the history of rigging."

Since floating in two years ago, New York at $ 17 per share, Fixed Inc had a rough time, including a controversial redesign of its flagship messages Snapchat app. Its shares are now trading at $ 10.

"Many investors have lost money from the fasteners," he said. "We have a taste of what it looks like for investors to rush into these things and killed."

There are people too careful?

Mr. White said that there is a big difference between Internet companies in the late 1990s and early 2000s, and now.

"These companies are much larger and more established in many respects," he said. "They were able to collect a huge amount of private capital and stay private longer and reach a size and scale that was quite rare for a company that is about to go public for the last time . "

Strebulaev professor said: "In the previous cycle, the business model was more about the future creator and creator of future income.

"Many companies have this income today. Now, about the future profitability of the Creator, which is very different. "

Among LYFT plans for $ 2.3 billion, raising it from the IPO, you have to invest in the acquisition and technology.

Already devoting money and resources for autonomous control.

It works with APTIV Irish firms to test self-driving cars in Las Vegas, where he completed a thousand trips. It is also developing its own autonomous vehicle system to its "Level 5" Engineering Center.

Nevertheless, Driverless cars away from running on public roads.

And Mr. White believes that in order to drive-Rod companies to make transport services cheaper alternative to car ownership, prices have to fall by 30-40%, maybe – a move that will affect the financial LYFT in.

What does this mean for other openings?

And Uber, Pinterest and AirBnB, service provider WeWork office and exchange firms reports Slack also rumored to be contemplating a stock market listing.

Professor Strebulaev indicates one of the reasons why so many businesses are considering this step this year due to the economy.

"If there is a downturn, the IPO window could close," he said. "It was, of course, in 2000, when the IPO window is closed, if no company can go public."

"Can it happen tomorrow? I do not expect so. Could this happen in the next six months? I think it is not unlikely. "

There is a danger, though, if there is a peak in the market, investors could end up getting burned.

Mr. Wallace said, "I think when I was losing $ 1 billion a year in my company, and I could sell it on a bunch of US retail investors, I would do whatever kooky IPO window with the & # 39 is.

"Look at the losses – someone has to pay for these losses."

Professor Strebulaev said: "What I believe, and this is not really about Uber and LYFT, but on average, a unicorn, that has 100-plus of them, and it is difficult to imagine, on the basis of historical facts and my research, that they will be successful. "

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