tag:blogger.com,1999:blog-8152901575140311047.post4128080110129743453..comments2024-03-28T12:49:46.624-04:00Comments on Musings on Markets: Lyft Off? The First Ride Sharing IPO!Aswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-8152901575140311047.post-33431789082843443382019-04-11T14:26:06.409-04:002019-04-11T14:26:06.409-04:00Hello Professor Damodaran,
Let's say we had t...Hello Professor Damodaran,<br /><br />Let's say we had two lyfts, and so together they controlled 100% of the market. Would your assumption for failure drop? <br /><br />Essentially, what I am trying to get at is that Uber or Lyft will win this fight. However, if we assume chances of failure for either, then someone else can buy both companies and scoop up the percentage of failure you apply for each company as their return. <br /><br />This being said, do you think Uber's ipo could actually be a positive catalyst for Lyft?<br /><br />Best, <br /><br />A fellow Sternie trying to think outside the BOX (tech ipo pun)Stern Studentnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-5655955232714592302019-04-01T05:49:07.313-04:002019-04-01T05:49:07.313-04:00Professor, thank you for the analysis.
I don'...Professor, thank you for the analysis.<br /><br />I don't think that your analysis of LYFT as a stand-alone company is either overly optimistic or pessimistic given how many moving parts there are. All the assumptions are very reasonable. However, I do think that your analysis is missing the acquisition premium that LYFT deserves, in my opinion.<br /><br />I don't think many will argue that the future of ride-sharing is autonomous. If I am calling the shots for Waymo, for example - the clear leader in driver-less technology - how do I monetize it? To me it seems that the likely strategic entry into the industry may be via acquiring LYFT. Yes, it is cheaper to build everything from scratch, but the network effect is a clear moat given the present size of ride-sharing. Also, the first mover advantage has a huge effect for any new technology and Waymo may not have the two-four years to roll out their own ride-sharing business.<br /><br />Let us now assume that this scenario is indeed realized. It would make your assumptions of margin, market share and the size of addressable market very conservative for the combined Waymo-LYFT. I haven't run the numbers yet on the spreadsheet that you kindly provided, but impact should be more than significant. <br /><br />The biggest question, in my opinion, is what probability to assign to such a scenario. My guess would be a 30-40% chance that this or similar deal will happen within the next 5 years.<br /><br />Would appreciate your comments on the above. Thank you very much again for sharing your thoughts.<br /><br />Best,<br />GeorgyAnonymoushttps://www.blogger.com/profile/02970774503098438598noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-91264223965586141682019-03-09T08:32:51.909-05:002019-03-09T08:32:51.909-05:00How does the operating margin go from -42.25% to +...How does the operating margin go from -42.25% to +15% over the next 10 years? That is a huge assumption - one that no rideshare company has yet proved possible - and the entire valuation hinges on it.nornoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-54545314260882679322019-03-08T19:41:02.175-05:002019-03-08T19:41:02.175-05:00Excellent analysis, once again. Thank you. And I l...Excellent analysis, once again. Thank you. And I love the phrase "kabuki valuation."Bray Creech MBA, CPA, CFP®https://www.blogger.com/profile/02214899947237578337noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-63877043954382552812019-03-08T14:07:04.506-05:002019-03-08T14:07:04.506-05:00Love the post, thanks for sharing. A Comment:
Loo...Love the post, thanks for sharing. A Comment:<br /><br />Looking at your spreadsheet, you add-back the IPO proceeds and current cash on hand to arrive at the share price (implies ~$10 of cash/share). Wouldn't this be artificially inflating value/share given that Lyft needs that cash in order to realize expected future cash flows? (i.e., not all that cash is excess)<br /><br />Interested in your thoughts<br /><br />Best,<br />Ryan<br />Always Learninghttps://www.blogger.com/profile/11296934313981790334noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-72815169512202257132019-03-07T23:22:28.935-05:002019-03-07T23:22:28.935-05:00Prof, I was just going through your recent valuati...Prof, I was just going through your recent valuation of Amazon. You have considered sales-to-capital at 6. But when you adjust for leases, advert, and r&d, it is about 2. The difference in valuation is quite a bit. <br /><br />I know it is not relevant to this post, but any thoughts on this when you do publish Amazon valuation (here) would be appreciated.<br /><br />ThanksAnonymousnoreply@blogger.com