Lyft IPO: 3 reasons why the company’s growth prospects are better than you think
March 25, 2019 | Blog

Lyft IPO: 3 reasons why the company’s growth prospects are better than you think

On the surface, Lyft’s growth prospects appear more limited than rival Uber. While Uber has aggressively expanded into new services and geographic markets, Lyft has remained steadfast in providing ridesharing services in the United States, expanding into Canada only last year.

But Lyft still has plenty room to grow. As the company prepares to go public this week, here are three reasons why Lyft could be on the upswing.

Home sweet home Despite Lyft generating a 153 percent compound annual growth rate (CAGR) increase in revenue since 2016, Statista estimates the U.S. rideshare market penetration will hit just 15 percent in 2019. After adjustments for age and proportion of the population in urban areas, we consider an estimate closer to 35 percent to be more appropriate. Either way, we are a long way from achieving market saturation. Lyft should be able to benefit from its historical focus on serving this market. And Lyft has barely scratched the surface in Canada.

Not just cars Lyft has strategically expanded into bike and scooter-sharing, two markets estimated to be growing at a faster rate than ridesharing. Lyft has made tactical moves that will give it a strong strategic advantage as these mobility industries continue to grow. Most notably, the company acquired Motivate, the largest bike sharing platform in the United States. Motivate operates bike-sharing systems across the country, including Ford’s GoBike in San Francisco, Citi Bike in New York, and Capital Bikeshare in Washington, D.C. According to Lyft’s S-1 prospectus, 76 percent of bike share trips in 2017 were taken on Motivate systems.

Autonomous vehicles Lyft has heavily invested in self driving vehicles. Specifically, the company is developing its own technology platform which allows partners to offer autonomous vehicles on the Lyft network. Aptiv, one of Lyft’s major partners, is testing vehicles in Las Vegas and completed 35,000 autonomous rides on the Lyft platform last year.

Of course, there are plenty of risks to consider. If the ridesharing market is closer to saturation than we believe, growth in its core business could be limited. Bike and scooter-sharing companies have had their troubles in the past, including disagreements with city regulators. Autonomous vehicle technology is still new and untested.

Nevertheless, we think Lyft has a compelling growth story and we think investors will agree with us when the company goes public Friday.

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Analyst compensation is based upon various factors, including the overall performance of SharesPost, Inc. and its subsidiaries, and the performance and productivity of such analyst, including feedback from clients of SharesPost Financial Corporation and other stakeholders in our ecosystem, the quality of such analyst’s research and the analyst’s contribution to the growth and development of our overall research effort. Analyst compensation is derived from all revenue sources of SharesPost, Inc., including brokerage sales.

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This report does not contain a complete analysis of every material fact regarding any issuer, industry, or security. The opinions expressed in this report reflect our judgment at this date and are subject to change. The information contained in this report has been obtained from sources we consider to be reliable; however, we cannot guarantee the accuracy of all such information.

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Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative and involves a high degree of risk. It should only be considered as a long-term investment. You must be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and you should complete your own independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or other investment advice.

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Alejandro Ortiz

Alejandro Ortiz

Alejandro is a Research Analyst, Private Investment Research for SharesPost Research LLC. Prior to joining SharesPost, he was a Valuation Analyst at Duff & Phelps with a focus on TMT industries.
PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

CONFLICTS

This report is being published by SharesPost Research LLC, and distributed by SharesPost Financial Corporation, a member of FINRA/SIPC. SharesPost Research LLC, SharesPost Financial Corporation and SP Investments Management, LLC, an investment adviser registered with the Securities and Exchange Commission, are wholly owned subsidiaries of SharesPost, Inc.

Recipients who are not market professionals or clients of SharesPost Financial Corporation should seek the advice of their own personal financial advisors before making any investment decisions based on this report. None of the information contained in this report represents an offer to buy or sell, or a solicitation of an offer to buy or sell, any security, and no buy or sell recommendation should be implied, nor shall there be any sale of these securities in any state or governmental jurisdiction in which said offer, solicitation, or sale would be unlawful under the securities laws of any such jurisdiction.

This report does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or advisability of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

ANALYST CERTIFICATION

The analyst(s) certifies that the views expressed in this report accurately reflect the personal views of such analyst(s) about any and all of the subject securities or issuers, and that no part of such analyst compensation was, is, or will be, directly or indirectly related to the specific views contained in this report.

Analyst compensation is based upon various factors, including the overall performance of SharesPost, Inc. and its subsidiaries, and the performance and productivity of such analyst, including feedback from clients of SharesPost Financial Corporation and other stakeholders in our ecosystem, the quality of such analyst’s research and the analyst’s contribution to the growth and development of our overall research effort. Analyst compensation is derived from all revenue sources of SharesPost, Inc., including brokerage sales.

DISCLAIMER

This report does not contain a complete analysis of every material fact regarding any issuer, industry, or security. The opinions expressed in this report reflect our judgment at this date and are subject to change. The information contained in this report has been obtained from sources we consider to be reliable; however, we cannot guarantee the accuracy of all such information.

Any securities offered are offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative and involves a high degree of risk. It should only be considered as a long-term investment. You must be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and you should complete your own independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or other investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2019. All rights reserved.