David Sylvain
ilovemygadgets blog Would Marketing Work For My Business?

Would Marketing Work For My Business?

But the business still has tremendous room for expansion, and the boutiques has huge potential for growth. BP plc (BP) – Shares of BP plc fell Friday as we still aren’t sure if the Top Kill has worked. I bought 12 shares for $99.67 per share. The current price per share is $20. When valuing young companies, it is the story that drives your numbers and valuation, not historical data or current financials. In this section, I will lay out my story for Lyft, drawing on past behavior and the clues that are in their current plans, but it would be hubris to argue that I have a monopoly on the truth and a claim on the “right” story. Lyft, for instance, in 2018, reported revenues of $2,156 million on gross billings of $8.054 million, working out to a 26.77% share. You can be the judge as bring my experiences to play in my valuation of Lyft, ahead of its IPO pricing.

 

So, feel free to disagree with me and you can use my valuation spreadsheet to reflect your disagreements. There are many factors that can explain how and why ride sharing so quickly and decisively disrupted the taxi cab business, but the latter was ripe for the taking for may reasons. In a post in 2015, I traced out the growth of ride sharing and the ripple effects it has had on the car service status quo, noting that revenues for ride sharing companies have climbed, the price of a taxi cab medallion in New York city has plummeted by 80-90%. The most impressive statistic, for ride sharing companies, is not just the growth in revenues, which has been explosive, but also how much it has become part of day-to-day life, not just for younger, more tech savvy individuals but for everyone. It will stay a US transportation services company: The total market that I assume for US transportation services is $120 billion at the moment, well over two and a half times larger than the taxi cab market was in 2009. That is, of course, well below the size of the transportation market, but the $1.2 trillion that Lyft provides for that market includes what people spend on acquiring cars and does not reflect that they would pay for just transportation services.

 

Put simply, these company are money losing machines, at least at the moment, and if there are economies of scale kicking in, they are showing up awfully slowly. In my 2015 post, I argued that the low capital intensity (where ride sharing companies don’t invest in cars) and the independent contractor model (where drivers are not employees), which made growth so easy, also conspired to make it difficult for these companies to gain economies of scale or stay away from cut throat competition. Note, though, that based on my numbers, I don’t expect to make my original investment (which averages out to $21/share) back. There are certainly some questions that one can ask oneself which, can help make your mind up if you might have been caught. In 2015, I argued, with tongue only half in cheek, that one possible model for the ride sharing companies to develop sustainable businesses was the Mafia’s mostly successful attempt to stop intrafamily warfare in the 1930s by dividing up New York city among five families, giving each family its own fiefdom to exploit.

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