S&P 500 PE
Based on the 5 May 2019 close the S&P 500 PE on trailing operating earnings is 18.25. That places it at the bottom of my fair value band that is based largely on long term treasury bond yields. We can each have out own theories, but it appears to be that the market is correcting on fears of what Trump’s trade war will have on earnings growth.
It is strike day for Lyft and Uber. Uber’s IPO is estimated to be at $90 billion which strikes me as way overpriced. Why? Net revenue is only $7.9 billion whereas operating costs are $12 billion for the latest reported year. Their net revenue is 7.5 times that of Lyft. Lyft’s operating costs turn out to be 170% of its net revenues.
Interestingly both companies have net revenues that are 23% of gross billing. Let’s put it this way. If your driver charges you $10 for a ride, he keeps only $7.70 even though its is his car, his gasoline, and he is an independent contractor getting no wages or fringe benefits.
If this strike works – the financials for these two companies will go from dreadful to just plain absurd.
Lyft had its IPO on March 1 this year. Suppose you had purchased 100 shares:
You’d be out $2300 by now. Keep this up and you can be a great business guru like Donald Trump was!