When Uber (UBER) invented the idea of for-profit ridesharing they arguably changed an industry forever.
Lyft (LYFT) soon got in the game, along with a host of follow-on companies.
The number of people taking rideshares has surged; the number of cities and countries where Uber and Lyft operate has surged; and the amount of money spent on this service has surged.
There's just one problem:
“Despite the positive cash contributed via secondary offerings UBER's book value is lower now than at Dec. 31, 2019," Real Money Columnist Paul Price wrote recently. "Investors privileged enough to get in on Uber's $45 IPO were still 15.4% underwater if they held on for almost three tumultuous years,"
For its part, "Lyft was always considered the lesser of these two firms although it was first to come public. Its shares fetched $72 in the March 2019 IPO, then rallied briefly to $76.”
But, Price points out, with Lyft’s shares falling to a range of $14.60 - $39 since, “[a]nyone who didn't exit almost immediately never got another chance to get even.”
All of which brings Price to his analysis of both companies.
"Firms like that are destroying value on an ongoing basis. Your mother probably gave you great advice when you were young: 'Getting into cars with strangers can be very dangerous, and should be avoided.'"
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