Dear Reader,
Lyft Inc., the American ridesharing company, is currently valued at 8.50 billion USD by public markets at present.
Is Lyft fairly valued? I think Lyft's current intrinsic value given the coronavirus disease COVID-19 pandemic lockdown is about 7 billion USD. Lyft lost 2.6 billion USD on 3.616 billion USD of revenue. Losing 2.6 billion USD is a staggering event. That said, ridesharing is here to stay. After the coronavirus pandemic, I expect ridesharing to get up to speed again. The main reason is that ridesharing is cheaper than taxi rides. People usually buy something because its saves them money, time or effort. Lyft's ridesharing definitely saves money to consumers. In 2018 Lyft lost 911 million USD on 2.16 billion USD of revenue.
However, to stay viable Lyft needs to start earning net profits. One way is the Netflix way. Once Netflix gathered enough users, Netflix started gradually raising prices for its video streaming service. Lyft could do the same. Lyft already has a large user base. Here it has to be said the current net profit margin of Netflix is 12.29%, so Netflix is not wildly profitable, it must be said, with Price/Earnings ratio of 91.96.
So in short, I think Lyft is worth 7 billion USD currently. That estimate of mine is predicated on the assumption that Lyft finds a path to profitability.
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Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.
Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Respectfully yours,
Petar Posledovich
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