SNS: Special Letter: The No-Go IPO

SNS: Special Letter: The No-Go IPO

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In This Issue
Week of 4/01/2019
Vol. 24 Issue 11

Special Letter: The No-Go IPO

  • The Uber Team
  • The Lyft Team
  • The Business Model
  • The Valuations
  • Competition
  • Other Options
  • Beware the IPOs
  • About Evan Anderson

Publisher’s Note: If one were to boil down the combination of financial lunacy and Valley optimism to a single contest over the last decade, it would be encapsulated in the IPOs of Lyft vs. Uber. Perhaps since Andreessen and Horowitz first entered the VC sweepstakes by paying 4x any number, there has been not only an accelerated shift of wealth to the 1%, but also a generally accepted rule that investors should pay for, and create, businesses that make no money but sell for billions.

Few, if any, of the patrons of either of these ride-share companies mind that all of their past few years of trips have been subsidized, at the rate of about 50 cents for each dollar spent, to get us where we want to go. Thank you, we’ve all been thinking – and perhaps you’ll get paid back some day.

That day began this week for Lyft investors, as the IPO soared above estimates and then rapidly came back down, as the idea quickly began to sink in that perhaps this was less a “disruptive” business than a VC-driven train wreck.

One must admit that, at least until now, comfort and general improvements of riding with either service has been so much better, in so many ways, that their ultimate market triumph was inevitable. But given their ongoing huge losses, one could also ask: would you not prefer a gold-gilded coach next ride, or just having to pay nothing at all?

In this week’s Global Report, Evan Anderson takes a cold look at this tulip-bulb story, and comes up with answers that all SNS members will want to read before jumping into the investor mosh pits. – mra

 

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