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(Bloomberg) -- Lyft Inc. executives said the company would turn a profit by the end of 2021, a year earlier than analysts had expected. The comments sent the stock surging as much as 9% on Tuesday.The ride-hailing company will hit that milestone because it’s focused on profitable growth, rather than scale at all costs, the founders said onstage at a Wall Street Journal technology conference in Laguna Beach, California. Lyft and Uber Technologies Inc. have been cutting back on subsidies for riders and drivers that had been racking up costs.“We’ve never laid out our path to profitability, and we know that’s a question on a lot of investors’ minds,” said Logan Green, the chief executive officer and co-founder. “We’re going to be profitable on an adjusted Ebidta basis a year before analysts expect us to. We’re going to hit this target in Q4 2021.”The comments also gave a boost to Uber’s stock, which was up about 4% at 1 p.m. in New York.In the interview, Lyft’s co-founders downplayed other challenges to the company, including the recent gig worker legislation in California and lawsuits by women against the company who say they were harassed or assaulted by drivers.To contact the reporter on this story: Lizette Chapman in San Francisco at email@example.comTo contact the editors responsible for this story: Mark Milian at firstname.lastname@example.org, Alistair BarrFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Lyft (NASDAQ:LYFT) shares jumped Tuesday after Lyft's co-founders said they believed they would hit profitability in the fourth quarter of 2021, a year earlier than expected.
(Bloomberg Opinion) -- Glamour stocks may be losing their allure.Buying profitable businesses at a reasonable price is one of the oldest and most trusted — and some might say boring — playbooks in investing. The father of security analysis, Benjamin Graham, plied the strategy, as did his protege Warren Buffett, legendary mutual fund manager Peter Lynch and countless other stock investors. But there’s been little interest in it in recent years, at least when it comes to U.S companies.Instead, investors have been betting on glamour stocks — companies with big expectations and pricey shares, but little or no profit — in the hope that they will blossom into cash cows like Facebook Inc. or Google parent Alphabet Inc. Think, for example, electric car maker Tesla Inc. or online video service Netflix Inc., or even pot stocks.Glamour has paid off big, not because those companies are suddenly minting fat profits — on the contrary, many still lose money — but because their popularity has boosted their stock prices. Glamour stocks, or shares of the most expensive and least profitable U.S. companies, have outpaced boring stocks, or shares of the cheapest and most profitable companies, by an astounding 16.8 percentage points a year over the last six years through August, including dividends. That’s when they began to take off relative to boring stocks, according to numbers compiled by Dartmouth professor Ken French.It’s not a bet for the faint of heart. Glamour stocks are likely to continue fetching high prices as long as investors hold out hope that profits will materialize, but if they tire of waiting, the reversal could be intense because glamour stocks have a lot of room to deflate. They traded at a weighted average price-to-book ratio of 10.1 as of August, compared with just 0.8 for boring stocks. Since 1963, the first year for which numbers are available, that difference was only higher during the height of the dot-com bubble in 1999, and not by much. In fact, there are signs that investors are beginning to lose their patience. Some of the most highly anticipated initial public offerings of glamour companies this year have been a bust so far. Shares of ride-hailing companies Uber Technologies Inc. and Lyft Inc. are down 30% and 43%, respectively, since their public market debuts. The ETFMG Alternative Harvest ETF, the first U.S.-listed marijuana exchange-traded fund, has tumbled 51% over the last year. And who can forget WeWork’s implosion from a $47 billion valuation in January to a proposed bailout that could value the office-sharing company below $8 billion.It’s not just a few companies. I compared the stock price performance of the companies in the Russell 3000 Index with their profitability over the last year. Roughly 45% of companies posted a profit margin greater than the weighted average margin for the index, and their stock prices rose by an average of 2%. By contrast, the stocks for the 30% with a profit margin less than the index declined by an average of 3%, and the remaining 25% that lost money were down an average of 10%. The results are similar when looking at other measures of profitability such as return on equity.Those results are also echoed by French’s numbers. His glamour stocks are down 4.3% over the last year through August, while the boring ones are up 6.4%.Even if the recent reversals turn out to be a short-term blip, investors must also navigate the likelihood that many glamour stocks will disappoint eventually, if they survive at all. That’s evident in their unflattering longer-term record. Glamour stocks have beaten boring ones just 25% of the time over rolling six-year periods since July 1963, counted monthly. And the vast majority of those victories are clustered around only two periods — the current one and a similar growth-at-any-cost binge during the late 1960s and early 1970s.That earlier episode is instructive. Then as now, investors eagerly paid any price for companies that held out the promise of outsized growth. The results were great while everyone played along. During the six-year period from October 1966 to September 1972, glamour stocks beat boring ones by 16.8 percentage points a year, a margin that matches glamour’s success over the last six years. But when those companies stumbled or failed to deliver on their promise in the ensuing years, investors abandoned them. During the following six years that ended in September 1978, glamour’s fortunes reversed, and boring stocks won by 17.3 percentage points a year. Sure, those with the foresight to pick future winners from a sea of glamour stocks have little to worry about. But, to rip off Dirty Harry, this might be a good time for investors to ask themselves one question: Do I feel lucky?To contact the author of this story: Nir Kaissar at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nir Kaissar is a Bloomberg Opinion columnist covering the markets. He is the founder of Unison Advisors, an asset management firm. He has worked as a lawyer at Sullivan & Cromwell and a consultant at Ernst & Young. For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Over the past few years, we’ve seen a number of interesting and much-anticipated IPOs—perhaps even more so in 2019. IPO Edge, with the help of Sentieo, has provided analysis that helped investors distinguish opportunity from serious risk. WeWork, for instance, initially looked a lot like Lyft, Inc. and Uber Technologies, Inc., but turned out far […]
Investing.com - Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) were under pressure on Friday after lawmakers sent them letters demanding answers after the companies failed to send representatives to a hearing.
Lyft has expanded its healthcare division recently, and this month Lyft is providing free rides to and from breast cancer screenings.
Uber and Lyft chose to skip the congressional hearing on Wednesday. The hearing was meant to examine the companies' safety and labor practices.
(Bloomberg) -- Uber Technologies Inc. and Lyft Inc. may soon face stepped-up oversight after largely avoiding traditional rules during their rapid expansion in recent years, the chairman of the House Transportation and Infrastructure Committee said on Wednesday.Representative Peter DeFazio, an Oregon Democrat, said at a hearing that ride-hailing companies have revolutionized how people travel but also have a lot of problems, such as adding to traffic congestion and conducting “woefully inadequate” background checks for drivers that have put passenger safety at risk.DeFazio’s comments signal that U.S. lawmakers may take a more critical look at how Uber and Lyft fit into the nation’s transportation system. Uber, in particular, has been criticized for avoiding traditional transportation and labor regulations by labeling itself a technology company, drawing scrutiny from federal prosecutors and officials in cities such as San Francisco and London.Uber and Lyft declined to send representatives to testify at the hearing after the companies “led us on for six to eight weeks that they would testify,” DeFazio said. In a statement on Thursday Lyft said the panel first contacted it about the hearing on Sept. 30. The hearing should serve as “a wake-up call to the companies that have flooded our roadways with disruptive technologies and investor capital that their days of operating with little public policy and regulatory oversight in the transportation space are coming to an end,” DeFazio said. (Adds Lyft comment in fourth paragraph.)To contact the reporter on this story: Ryan Beene in Washington at email@example.comTo contact the editors responsible for this story: Jon Morgan at firstname.lastname@example.org, Gregory MottFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
SAN FRANCISCO, Oct. 17, 2019 -- Lyft, Inc. (Nasdaq:LYFT) announced today that Logan Green, Co-Founder and Chief Executive Officer, and John Zimmer, Co-Founder and President,.
Uber Technologies Inc and Lyft Inc skipped a U.S. House of Representatives hearing the ride-hailing industry, angering lawmakers who threatened tighter regulation for the fast-growing market. The two ride-hailing companies had been asked to appear as part of a House Transportation and Infrastructure Committee inquiry on safety, labor and congestion. "Their failure to appear at this hearing is a telling sign that they would rather suffer a public lashing than answer questions on the record about their operations," the head of the panel, U.S. Representative Peter DeFazio, a Democrat, said at the subcommittee hearing.
(Bloomberg) -- Wall Street’s tepid reception to highly-anticipated IPOs from Peloton Interactive Inc. and SmileDirectClub Inc. shows rising anxiety that a recession could be on the horizon, analysts say.The struggles for the home exercise company, the dental aligner maker, and ride-hailing peers Lyft Inc. and Uber Technologies Inc. may give a glimpse into how investors are valuing their services as well as what a global slowdown could mean for the consumer-dependent stocks.“The weakest link is retail. Companies that sell to –- or stocks that are bought by -– individual retail buyers will feel the effects soonest and most,” said Rett Wallace, CEO of Triton Research Inc.Weakness in these mega-IPOs has partially been driven by a rotation toward more defensive business models, MKM analyst Rohit Kulkarni said in a telephone interview. While Uber and Lyft could benefit from a spike in part-time drivers, demand for their services and Peloton’s subscription numbers may take a hit if consumers have less money to spend, he said.“Consumer companies such as Uber, Lyft and Peloton will probably feel a more near-term impact of any potential slowdown in the macroeconomic space,” Kulkarni said. Traders could shun their monthly subscriptions or pay-as-you-go models, if slowing revenue lengthens their path to profitability.The S&P 500’s brief climb above 3,000 for the first time in three weeks provided a lift for some of the beaten-down companies on Tuesday. Peloton had its best session, rising 9.2% off a record low, while SmileDirectClub bounced 6.3% to trade back above $10. But both stocks are still trading well below their offering prices.Both had also set the terms for their IPOs in September, shortly after the spread between 3- and 10-year Treasuries bottomed out in August, indicating a higher probability of a recession. According to data compiled by Bloomberg, the probability of a recession had then peaked at nearly 40%.SmileDirectClub’s more than 50% decline from its September offering has placed it among the year’s worst performers. An analyst who follows the company closely said in an email that he is impressed with its business model but acknowledged that “it certainly will have exposure to an economic downturn given the discretionary nature of orthodontics.”Some of the best-performing IPOs show the inverse. Application software companies have seen their stock prices surge as investors favored firms that face businesses instead of individuals. Zoom Video Communications Inc. and CrowdStrike Holdings Inc. are a few that come to mind when surveying the landscape of red-hot companies whose business models might be more sustainable.While Beyond Meat Inc. remains the year’s best performing IPO, with a more than 385% gain since going public in May, it has cooled off from its summer sizzle. The stock has lost almost half its value from a July 26 peak, shedding almost $7 billion in value.Now, the challenge for investors, according to Kulkarni, is valuing large, unprofitable companies at just the time when the global economy may be headed for a slowdown, and maybe even recession.To contact the reporters on this story: Bailey Lipschultz in New York at email@example.com;Drew Singer in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Catherine Larkin at email@example.com, Jennifer Bissell-Linsk, Scott SchnipperFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Saudi Aramo is forging ahead with IPO plans that may value the company at $2 trillion, as investors weigh the risks associated with the offering.
Entrepreneur brothers Courtney and Carter Reum's three-year-old venture firm announces a new fund, backed by Sir Richard Branson, Arianna Huffington and Hong Kong billionaire Silas Chou.
The lawsuit, filed by the San Francisco-based ride-hail company on Friday, argues that the cruising rule is arbitrary and threatens to shift business away from ride-hailing companies like Lyft in favour of taxis. "This rule is not a serious attempt to address congestion, and would hurt riders and drivers in New York," Lyft spokesman Campbell Matthews said in a statement to Reuters. The "cruising cap" rule, implemented by the city's Taxi and Limousine Commission (TLC), sets a 31% limit on how much time drivers of app-based vehicles may drive without passengers in Manhattan south of 96th Street, meaning they would have to have fares at least 69% of driving time.
In Berlin, companies like Uber don't have a dominant hold on transportation. Instead, many companies compete for a slice of the market.
Zoom Video is trading significantly higher than 2019's other IPO debutants. Zoom stock had an offer price of $36 and is trading at $73.52—104% higher.
Pinterest went public on April 18, smack in the midst of the unicorn IPO parade of the past six months that included Lyft, Slack, Uber, CrowdStrike, Smile Direct Club, and Peloton). Every one of those stocks is trading down from its IPO price. Except for Pinterest.
(Bloomberg) -- “Where’s the best place to hide a body? The second page of a Google search.”The gallows humor shows that people rarely look beyond the first few results of a search, but Lee Griffin isn’t laughing.In the 13 years since he co-founded British price comparison website GoCompare, the 41-year-old has tried to keep his company at the top of search results, doing everything from using a “For Dummies” guide in the early days to later hiring a team of engineers, marketers and mathematicians. That’s put him on the front lines of a battle challenging the dominance of Alphabet Inc.’s Google in the search market -- with regulators in the U.S. and across Europe taking a closer look.Most of the sales at GoCompare, which helps customers find deals on everything from car and travel insurance to energy plans, come from Google searches, making its appearance at the top critical. With Google -- whose search market share is more than 80% -- frequently changing its algorithms, buying ads has become the only way to ensure a top spot on a page. Companies like GoCompare have to outbid competitors for paid spots even when customers search for their brand name.“Google’s brought on as this thing that wanted to serve information to the world,” Griffin said in an interview from the company’s offices in Newport, Wales. “But actually what it’s doing is to show you information that people have paid it to show you.”Market DominanceGoCompare is far from the only one to suffer from Google’s search dominance. John Lewis, a high-end British retailer, last month alluded to the rising cost of climbing up in Google search results. In the U.S., IAC/InterActive Corp., which owns internet services like Tinder, and ride-hailing company Lyft Inc. have signaled Google’s stranglehold on the market.The clamor from companies has prompted the U.K. competition watchdog to study online platforms and digital advertising in July, aiming to examine the market power of companies like Google over online marketing. The European Union has been trying to rein in Google, fining the company 1.5 billion euros ($1.6 billion) this year for thwarting advertising rivals. In the U.S. there’s a rising chorus of voices on the political left and right demanding Google be cut down to size, somehow.Searching GameThe case of GoCompare shows just how difficult it is to win the search game.GoCompare is known locally for its off-beat ads where an opera singer belts out its name in restaurants, taxis and, more controversially, crawls out of a flipped car in a recreation of an accident. When customers look for the company’s name after seeing an ad or type in a query for auto insurance, what appears is a combination of paid advertisements, Google’s own blurbs and then so-called natural search results, a list of what the tech giant deems are the most reliable sources of the information. But even ranking highly on natural search results can be costly.“The way the algorithm works is constantly changing and you don’t get insight into it,” said Lexi Mills, chief executive officer of Shift6, a marketing consulting firm that helps clients improve their search results. “The people who get to optimize tend to be the people with the most money.”Nowhere is Google’s power more evident -- and potentially damaging to businesses -- than in the market for “branded keywords.” This is where businesses buy ads based on their brand names. So GoCompare bids on the word “GoCompare” and when people search for that, Google runs an ad at the top of results usually linking to the company’s website.‘Odd Place’Some businesses say they have to buy these ads -- whatever the cost -- because rivals can bid on the keywords too.If GoCompare decides not to bid for its own brand, Google can legally sell the ad placements with its name to a competitor, with the top bidders getting the best spots on the page and taking away customers.“That seems like an odd place to be that I have to bid on my own brand,” said Griffin. When the company confronted Google about it, the tech giant said “tell your competitors to stop bidding on you,” according to Griffin.The price GoCompare has to pay for search terms that use its brand has more than doubled since 2016, with a real surge in the last 12 to 18 months, parent company GoCo Group Plc Chief Executive Officer Matthew Crummack said.Jason Fried, the CEO of web development company Basecamp, described Google’s practice as “ransom” in a tweet, and said he was quickly deluged with messages from other small businesses who also felt victimized. Tariq Farid -- the CEO of Edible Arrangements who has sued Google over its sale of ads targeting his company’s brand -- believes the change in atmosphere in Washington could eventually shift the debate. “It gives some confidence to people to step up and do something about it,” he says.Long FightGoogle has real-time pricing for terms like “auto insurance” that GoCompare relies on for sales. Every time someone searches for that term, the prices refresh, driving a tough -- and pricey -- battle for the top spot between GoCompare and rivals like Comparethemarket.com and Moneysupermarket.com.“Google must be rubbing their hands together thinking, ‘This is great,”’ when competitors battle it out for top spots, Crummack said. “Every time that happens, the price goes up and they don’t have to do anything.”Google defends its system, saying “in order to offer more choice when searching for products or services, we allow competitors to bid on trademark terms. However, we want to balance the interest of both consumers and advertisers, so we allow businesses to file a trademark claim and then we’ll block competitors from using their business name in the actual ad text.” The company also said it’s not just the top bidder, but the top bidder with the most relevant information that gets the coveted spots.Still, GoCo is looking for ways reduce its reliance on Google, studying a subscription model under which customers sign up for a service that automatically searches for the best rate when policies are due for renewal. That would potentially give the company a captive market. It is also banking on regulators to eventually fix the skewed market, although Crummack doesn’t see that happening anytime soon.“It’s not something that helps trading next reporting period,” he said.(Updates with executive comments from Basecamp, Edible Arrangements on branded search in 17th paragraph.)\--With assistance from Joshua Brustein.To contact the reporter on this story: Amy Thomson in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Giles Turner at email@example.com, Vidya RootFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.