How To Invest In Lyft

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Reasons To Not Invest In Lyft

How Does Lyft Work — Does it Make Money?
  • Driverless Cars Not Coming Soon Enough: Driverless cars are not going to be a significant factor in the ridesharing market for a long time perhaps over a decade. Bill Gurley of Benchmark Capital, said at the Launch Festival in San Francisco that he doesnt see driverless cars being commercially viable for at least 20 years.
  • Unsustainable Business Model: Whether youre Uber or Lyft, youre basically operating in a market that has an unsustainable business model and passengers now have unrealistic expectations regarding the reasonable price for the service thats offered.
  • Its a Messy Business: Ridesharing is a messy business with all kinds of conflict and potential for public relations disasters .
  • What Happens When the Recession Comes: Were now living in the 10th year of an economic expansion, and yet Lyft and Uber are losing money at an astonishing rate. If they cant make money during good economic times, whats going to happen when the economy starts tanking?
  • Legal Uncertainty: Legal questions hang over the entire industry, especially with the most recent ruling in California that drivers must be treated as employees. Thats a ruling that could fundamentally change the economics of the business good news for drivers, bad news for Uber and Lyft.
  • Lyft Stock Jumps On Mixed Earnings

    Lyft stock got a brief boost from the company’s mixed Q4 earnings in early February. The ride-hailing giant reported adjusted earnings of 9 cents per share on revenue of $970 million on Feb. 8. Though Lyft beat Wall Street estimates on revenue, it reported fewer active riders in last quarter. Lyft saw an active ridership of 18.73 million vs. 20.2 million expected by analysts.

    Lyft stock jumped after earnings. But it quickly gave back those gains over the next few trading days.

    The San Francisco-based company also lowered guidance for Q1 due to the omicron surge. Management expects Q1 revenue to fall to between $800 million and $850 million.

    Lyft’s Big Money Investors

    Lyft is clearly the smaller of the two companies, operating in 65 cities in the United States only, while Uber covers 250 cities worldwide. Marc Andreessen, founder of Netscape, has a fractious history of public feuds with Icahn, but he poured $60 million into Lyft through his firm Andreessen Horowitz LLC. A major investor in Andreessen’s firm is former New York City mayor Michael Bloomberg, who a few years ago promised to destroy the yellow cab business in New York City. In early 2015, Lyft also raised over $500 million in funding from a Japanese venture capital firm.

    Meanwhile, there is another facet of the rivalry between Uber and Lyft. As China pushes aggressively to grow Didi Kuaidi, its own dominant ridesharing service, against inroads in China from Uber, it is investing in Lyft. Alibaba, Tencent, and Softbank Capital have also piled in, joining the anti-Uber alliance.

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    How To Buy Lyft Stock In The Us

    The best platform to buy Lyft stocks in the U.S. is Stash Invest. Read below how to get started.

    Step 1: Register your account

    The first step to invest in LYFT in the U.S. is to sign up to our recommended broker Stash. Firstly, Fill in basic personal information and the investor profile. For ID verification, you will only be asked for your social security number.

    Step 2: Choose a Stash plan

    Choose between a Beginner , Growth , or Stash+ account. All three offer a personal investment account and bank account with Stock-Back rewards and a 2-day early payday. Choose the Growth account to add a Retirement account. Stash+ adds investment accounts for two kids and a debit card with 2x Stock-Back. Pay for your monthly subscription via your bank account or debit/credit card.

    Step 3: Fund your account

    Link your bank account and fund your account by wire transfer. Receive $50 to invest when you deposit $300 within 30 days. Optionally, add the Smart-Save feature, which monitors your income and savings patterns and suggests how much to allocate to savings.

    Step 4: Trade Lyft stock

    Type the LYFT ticker in the Search box. Enter the fractional share amount you want to invest: $5, $25, $50, or a custom amount. Press Check Out on Stash to pay for the stock trade from your Stash account.

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    Find Out Which Restaurant Company Is Taking A Big Hit

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    Investors were on edge on Wednesday morning, impatiently waiting for the latest news from the Federal Reserve about how it plans to handle monetary policy. With so much at stake, market indexes were largely in a holding pattern. At 11:30 a.m. ET, the Dow Jones Industrial Average was up 25 points to 33,154. However, the S& P 500 had dropped 14 points to 4,164, and the Nasdaq Composite was off by 177 points at 12,387.

    As you can see from the Nasdaq’s performance, many of the tech stocks that have taken big hits in recent months were again on the list of decliners. However, a couple of other companies stood out for seeing notable drops in their share prices. Ride-hailing specialist Lyft was a major casualty, but disappointment from restaurant operator Brinker International also ate into investor sentiment. Below, you’ll find more on both companies and what they said about their respective businesses.

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    Wait And See Before You Invest

    Your best opportunity to invest may be later. According to CNBC, while these companies have found their window to go public, your best opportunity to invest may be later. New offerings come with high risks and few guarantees. The longer you wait, the more likely you are to get a fair price, experts say.

    For multiple companies, its the moment theyve been waiting for: The window has opened for them to go public. Youve probably heard the names, including Levi Strauss, which made its public market debut this week. Ride-sharing businesses Lyft and Uber, among other companies, are also teed up to go public in the coming months.

    But if youre thinking you want to invest in these stocks, experts generally have one word of advice: Wait. IPOs arent just about, Oh, I want to invest in the things I know, said Kathleen Smith, principal and manager of IPO ETFs at Renaissance Capital. Its about, How do I make money investing in these? It doesnt do any good to own something when youre losing money in it.

    In todays market, chances are that buying in on a newly public stock could be a losing proposition. Financial experts say there are several reasons why. You could already be at a disadvantage. Even though the stock is not yet public, you could already be behind. Just accessing IPO shares is difficult, Smith noted, because most shares will be allocated to big institutional clients of Wall Street firms.

    Lyft Uber Add Temporary Fuel Surcharge

    Lyft said it plans to add temporary fuel surcharges to rider fares. The company announced the pending increases on March 14, as gas prices continue to surge in the wake of the Russian invasion of Ukraine. Lyft has yet to detail how much customers will pay for surcharges, but said all fees will go directly to drivers.

    Lyft stock fell on the news.

    Last week Uber began adding fuel surcharges to its platform. Those customers will see a surcharge of either 45 cents or 55 cents per trip, depending on their location.

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    How To Buy Lyft Stock

  • Final Thoughts

  • The Lyft valuation of $24.3 billion in its initial public offering in 2019 grabbed the attention of many investors. While its start on the stock market was rocky and it certainly wasnt helped by the COVID-19 pandemic, Lyft has been recovering since late 2020, making investors consider the strong possibility of revival.

    With investors showing interest in the ride-hailing industry, you may be wondering how to buy Lyft stock and if it will help you diversify your own stock portfolio. Read on to find out more about the company, its stock performance, and how to buy its shares.

    Ride Hailing Usage Growth Stabilizes

    Invest in Lyft IPO? | The Dough Show

    Global ride hailing user growth of 16.1 percent in 2019 will slow between 20202023 to 8.3 percent . Although car ownership is growing, the number of car-free and car-light households is also growing . Once self-driving cars are in the road and you can program an Amazon Echo smart home system to hail a Lyft or Waymo car to run errands or pick you up at the door, we expect non-car or one-car households to grow at a faster rate. The outlook for Lyft stock is low-to-median.

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    How To Invest In Lyft Before The Ipo

    This is not common knowledge, but

    There is currently an opportunity to invest in Lyft.

    Unfortunately, for many reading this article, you wont qualify to invest in Lyft since you must be an accredited investor.

    Fortunately, for the accredited investors out there, you already can potentially invest in Lyft.

    Uber Is Lyft’s Biggest Competition

    Uber is Lyft’s biggest competitor and the most well-known U.S. ride-hailing app.

    Lyft is still growing its business despite the competition. The company went from 53.3 million completed rides in 2015 to 162.6 million completed rides in 2016, a 136% increase in just one year.

    However, Uber is still vastly ahead of Lyft in its amount of completed rides. We don’t have totals for all of 2016, but in just December 2016, Uber completed 78 million rides.

    Lyft only operates within the United States, while Uber operates in 570 cities around the globe. That’s part of the reason why Uber has a $70 billion valuation, while Lyft is only valued at $7.5 billion.

    But while Lyft may be a smaller operation, retail investors may find it a more appealing investment than Uber because Lyft is not engulfed in scandals. Over the past year, Uber has dealt with accusations ranging from theft to creating a company culture that endorses sexual harassment.

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    So, is Lyft a better investment than Uber?

    Before buying Lyft stock on the Lyft IPO date, this is everything you need to know…

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    How Can Accredited Investors Invest In Lyft

    Accredited investors can invest in Lyft through a company called

    EquityZen

    Through EquityZen, an accredited investor has access to invest in Lyft before its IPO.

    Below is an infographic from EquityZen regarding Lyft:

    If you are an accredited investor interested in a Lyft pre-IPO investment, EquityZen may be able to make that possible.

    For those not interested in a pre-IPO investment, read on

    Stock Slides 11% After Early Release Of Earnings Meant To Counteract Effects Of Poor Lyft Report

    Investing In Uber Or Lyft Alternatives

    Uber tried hard on Wednesday to show investors it does not have the same problems as rival Lyft.

    Uber Technologies pulled out all the stops on Wednesday to distance itself from the issues that pulled down rival Lyft Inc., but its shares fell anyway.

    Ride-hailing company Lyft LYFT, -29.91% reported said it was going to increase its spending to attract more drivers Tuesday while reporting middling earnings. Ridership in the quarter and revenue guidance for the second quarter were a bit short of Wall Streets expectations, while its forecast for adjusted earnings was much lower, fueling a 31% drop in its shares on Wednesday. Wedbush Securities analysts wrote a note on the quarter, entitled: Spending Like an 80s Rock Star Wont Fly With Investors.

    The stock fell more than 25% during Lyfts late Tuesday earnings call, pulling Uber lower with it. Uber said it would move up the release of its earnings to before the U.S. stock market opened Wednesday, instead of after the market close, its usual practice. It was pretty clear Uber executives wanted to show they had good news and avert a similar disaster in its own stock.

    Executives sought to reassure investors that it is no longer having any issues attracting drivers, emphasizing many of its growth expansion projects, such as grocery delivery and working with taxi companies in New York and San Francisco.

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    Be Ready For Multiple 50 Percent Declines

    It took about a year for Facebooks stock to get back to its opening price. Today, the stocks performance would be considered a success as long as you held on. Even if you pick the right company, like Facebook, which has done amazingly well, you still had to put up with a 50 percent decline, multiple 40 percent declines, multiple 20 percent declines, McKevitt said. How many people bought it and held onto it through all of these moves?

    Investors would be wise to keep in mind that the lock up period could affect the stock price, said Megan Gorman, managing partner at Chequers Financial Management. Lock up periods are a set amount of time, typically three to six months, when large shareholders are prohibited from selling their shares following an IPO. Once that time is over, that can sway the stock price. You can sometimes see the stock price has a pull back not always, but there can be when the lockup ends, Gorman said.

    So Should You Invest In Lyft

    Privately held companies can release as much or as little about their performance as they wish. The less you know about a companys financials, the greater the risk. Everyone has a different tolerance for risk, and a different level of disposable assets that they can afford to lose altogether.

    Make no mistake about it: Lyft is a risky investment even more risky than Uber. What makes Lyft especially risky is the nature of its assets. Although it has invested billions in building their network and their brand, they have very few tangible assets to show for it. They have some intellectual property, maybe a few patents, some trademarks and brand awareness, but if Lyfts money ran out, and they had to start scaling back operations and laying off employees, theres just not much thats salvageable from Lyft.

    The drivers own their own cars. The passengers can find other modes of transportation even public transit. They use Lyft because its a faster, cheaper alternative. But thats the real hazard of investing in both Lyft and Uber the industry has yet to demonstrate they have a viable business model. Rideshare companies have demonstrated they can grow if they offer rides at subsidized fares, but no one is certain how much demand will fall if they raise fares to market rates, which eventually they must do.

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    What Is The Difference Between Buying Selling And Trading Shares

    If youre new to stock investing, then its important to understand the basics of all the options you can use to get your hands on Lyft shares. Heres a quick run-through of whats involved in each.

    Buying Lyft

    This process involves finding a broker and placing an order for Lyft stock, as outlined in the steps further up this page. Ideally you want to time your investment when the stocks price is low so that you can profit by selling the shares after they increase in value.

    Selling Lyft

    When you sell any Lyft shares, youll want to do so at a higher price than the one at which you bought to earn a profit.

    When you sell is up to you. You might decide to hold a stock for a long period of time, hoping to benefit from the company growing steadily throughout. Or, if you see that Lyfts stock is already up a lot compared to the price you bought it and youve noticed that the stock market is starting to fall, it might make sense to sell and take your profits to invest elsewhere. Equally, if the stock has fallen since you bought it and looks set to fall further, it might be a good idea to cut your losses by selling your shares.

    Trading Lyft

    Lyft: Is It A Buy Right Now

    What is an IPO? And Why Do Companies Like Lyft & Uber go Public?

    Lyft stock is still well below its IPO price of 72. It’s improved since November 2020, but remains in a downtrend.

    Bottom line: Lyft stock is not a buy right now. Though shares got a bump after Q4 earnings, that quickly evaporated. Investors should look at other stocks with stronger fundamentals showing compelling technical action.

    To find the best stocks to buy and watch, check out IBD’s Stock Lists page. More stock ideas can be found on our Leaderboard and platforms.

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    They Have Already Reached The Peak

    Whats more, many of the names going public now have waited longer to go public and seen their valuations surge during that time, said Nicole Tanenbaum, chief investment strategist at Chequers Financial Management. Uber and Lyft, for example, are considered unicorns, or startup companies valued at more than $1 billion. Along the way, they have raised large amounts of private funding. Uber previously raised roughly $20 billion in funding and is eyeing a $120 billion valuation when it goes public. Lyft has raised more than $5 billion and plans to be valued at $23 billion.

    When they do go public, much of the appreciation has already happened in the private markets, Tanenbaum said. That means that earlier investors, who got in at a lower price, stand to see greater gains. The upside for the public investor is much more diminished, Tanenbaum said. Some companies that are going public these days including Levi Strauss and Lyft are pursuing a dual-class structure. That means that certain investors notably company management have preferential shares and voting rights compared to a separate common stock that typically comes with just one vote per share.

    In the long run, its not good, Smith said. If problems happen with the company, you want to be able to know the founders cant just do what they want without some kind of checks and balances.

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