(Dan here…Lifted from comments at Spencer’s SP 500 PE)
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!