Can Lyft Be A Good Investment?

Lyft has filed S-1 for IPO on March 18th of this year (2019). Since Lyft isn’t yet a public company, we can’t really know the true numbers of Lyft’s finance. Nevertheless, leaked information tells us that although Lyft revenues are increasing tremendously it is also losing a lot of money on operational and R&D costs. Leaked information may not be accurate at all, but if the information is accurate Lyft may have to struggle a lot before it can become a profitable company.

According to the information we have Lyft is operating at a loss of $911 million net loss in 2018. Net loss is very important because a net loss tells us that Lyft isn’t a profitable company yet. It seems Lyft’s revenues are not able to cover the operating and R&D costs. The general definition of a net loss is that a total of expenses is bigger than a total of revenues.

Nevertheless, Lyft seems to boost its revenues very fast! In 2016, Lyft’s revenues were totaled at $343 million, but if the information is correct in 2018 Lyft’s revenues are totaled at $2.2 billion. If one looks at this closer, it seems Lyft has a chance of making it if the revenues are going to continue to go through this positive, exploding trajectory for some time to come.

Lyft is considering to invest more in R&D in regards to rolling out a self-driving fleet. If Lyft can get behind a self-driving fleet enormously and get the technology to work for real, then I think Lyft has a big chance to cut costs tremendously. If revenues continue to pick up, eating away Uber’s market share, and cut costing measures are going to be effective — Lyft could very well become a profitable company.

Lyft and Uber are competing for the same market, and both of these companies are driving Taxis out of business. Since Lyft and Uber are able to do this to Taxis, we can tell that companies like Amazon, Google, and even the car rentals and car dealerships themselves could get into the same act as Lyft and Uber when self-driving becomes a reality. This could be a very crowded market, and if my intuition is accurate it could mean Lyft and Uber may have a very tough market to operate in as time goes on. So the profits/revenues Lyft is having now could very well dwindle in the future!

Self-driving will change how people commute in the future. Car dealerships can jump into the act of allowing people to hail for self-driving cars. Perhaps, people of the future will not buy cars as much since they can just hail for a self-driving car? Google and other big tech companies can also create apps to allow the sharing of self-driving cars like how we have bike-sharing now. This could mean companies like Google don’t have to own a fleet of self-driving cars to be in the business of self-driving car-hailing. It’s like people to people self-dealing business but using a futuristic app of a huge tech giant where the tech giant gets to keep a small portion of the profit.

In summary and in truth, I’m not very sure if Lyft could be a good investment or not. Leaked info tells us that the company got a good chance of becoming profitable since the revenues keep on exploding to the positive territory — but the company has to be able to keep the operating and R&D costs down eventually! Nevertheless, the market which Lyft is operating in is possibly getting very crowded because of the self-driving car technology. If by the time the market gets so crowded and yet Lyft isn’t becoming profitable, then Lyft could find itself in a world of hurt! Personally, if I ever want to invest in Lyft, I won’t make it as one of my long term investments! If I ever invest in Lyft, I may have to watch out for the actions of other companies in the car-hailing market very closely. I may also have to watch out for new players that could enter the car-hailing market because new players could dilute the profitability of car-hailing market.

Facebook Haters And Lovers Came Out In Droves On Facebook IPO Day

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facebook (Photo credit: sitmonkeysupreme)

It’s easy to envy others who are wealthier than us, but when it comes down to the truth we too want to be just as wealthy or wealthier.  CNN has a piece, Surprise: The Internet hates rich people, which suggested that people were not happy about how their profiles and social interactions had become monetized and made many Facebook staffs and investors super wealthy.  I think the people who envied about the newfound fortune of Facebook staffs and investors were probably angry that they didn’t get a piece of the action — they are the contents and yet have got nothing from Facebook IPO (Initial Public Offering).  Obviously, it’s within our human nature to feel like that!  Obviously, Facebook has done nothing wrong to deserve such a scorn and envy, because it’s a company with a sole purpose of making the people who run and invest in the company wealthier.

Facebook IPO was happened during the trading time today, but after the market has closed the share price for Facebook stock is just 23 cents higher than its IPO share price which was at $38.  At $38.23 a share now, some people on CNBC news had reported that there were people who felt disappointed that Facebook stock wasn’t doubled on IPO debut.  Obviously, it might be that people were not so sure that Facebook could sustain the hype, and they might feel that Facebook stock was too overvalued.  In any case, the emotion was running high all day as people were either hate or love Facebook for its IPO debut.

I do think I might have an idea for the people who envy of the newfound fortune of Facebook staffs and investors, they can simply band together and create a competitive social platform (i.e., similar or better than Facebook) which will share whatever fortune derives from running such a social platform to all social members.  It’s just that they do have to convince businesses around the world to advertise with this particular social platform, and if the business takes off the social members within this particular social platform will reap the shared profits.  Perhaps, they can too have an IPO and all social members will share the profits from having a successful IPO (if the IPO is successful though).  Nonetheless, they have to address how much profits to be shared with new members and veteran members.  They might have to come up with a very complicate mathematical formula to distribute whatever profit there is to all of their social members, or else some people will definitely complain that they have not received the fair portion of the profit.

I don’t think we should hate Facebook staffs and investors for their newfound wealth that derived from Facebook IPO debut, because Facebook IPO debut followed a well accepted corporate structure in regarding to how a private company allowed itself to become a publicly trade company.  The people who hate to see Facebook becomes successful can always cancel their Facebook accounts.  Also, they can band together to create a social platform that allows sharing profit as to how I had described in a previous paragraph.

In regarding to the future of Facebook stock, I don’t think anyone will definitely know.  Facebook is a company that has a lot social members (as in 900 million users or more) and yet it cannot generate the level of revenues that people are expecting it would.  Furthermore, Facebook type of business is all about being excellent in retaining happy members, because unhappy members can always just leave Facebook for a competitor in matter of a second.  People can always leave Facebook for something better or newer or fresher.  In upcoming days, Facebook has to come out with services that are stickier than just allowing people to be connected and stay happy, because happiness can be very moody sometimes — as in I’m happy now, but how about a few minutes later?  Sure, people love to connect, and Facebook is good at this, but there will always be plenty of alternative social platforms and web services that are also excel at allowing people to feel socially.  Facebook future will have to rely on convincing its members that not only they have to be connected and stay happy within Facebook, but they also have to click onto Facebook ads and do whatever else that can generate the kind of revenue that Facebook shareholders have hoped for.