Lyft (LYFT) Faces the Public; Should You Buy the Stock?
It’s been a long wait for those interested in big tech IPOs.
Today, Lyft’s (LYFT) IPO was priced at $72 per share valuing the company north of $20 billion. Lyft is the biggest technology company to go public since SNAP’s IPO two years ago.
When it comes to IPOs in general, investors should be cautious. These deals can easily flame out, as we’ve seen with Zynga (-47%), Groupon (-83%) and, of course, Snap (-36%).
Indeed, while the company generated nearly $8 billion in bookings in 2018, there are also a number of potential risks, says Wedbush analyst Daniel Ives. These include: competitive pressures from leader Uber as well as rising competitive forces, lack of a path to profitability in the near-term, regulatory uncertainty, and positioning within the next generation autonomous driving arms race with Waymo and others well ahead of the company from an R&D perspective despite its Las Vegas fleet of autonomous vehicles.
In a research note released this evening, Ives reiterated a Neutral rating on Lyft stock, with an $80 price target. (To watch Ives’s track record, click here).
“This IPO is a “watershed” event for the tech sector as well as the ridesharing industry that in our opinion has become one of the most transformational growth sectors of the US consumer market over the past five years with Lyft establishing itself as the clear #2 player behind the worldwide leader Uber. The company’s Transportation as a Service (TaaS) model has clear benefits for US consumers as more shift away from taking taxis and/or their own vehicles in many cities given the convenience and cost savings, a clear 1-2 value proposition resulting in massive growth at Lyft over the last few years. We note that Lyft’s market share in the US has grown from 22% to 39% (2016 to 2018) as it has facilitated over 619 million rides (65% year over year growth) in 2018 and serviced over 30 million riders and roughly 2 million drivers on its platform,” Ives noted.
All in all, it’s easy to identify the hottest tech stocks of today, but it’s much more difficult to look several years through the fog and determine who’ll still be on top. We use TipRanks’ Analysts’ Top Stocks tool to identify the tech stocks which have received the most bullish recent ratings from the Street’s top analysts. These are the analysts that consistently outperform the market with the highest success rate and average return.