Lyft and Uber Are Easy to Understand and Hard to Value
The companies defy easy classification for IPO investors.
Breaking new ground means nobody has been here before.
Photographer: John Taggart/Bloomberg
What is Lyft Inc.? It seems like an easy question. Lyft connects people who want a ride with ersatz taxi drivers. But for investors in Lyft’s coming public stock offering, the answer is trickier.
Investors want to be able to classify companies into familiar categories. When Facebook went public in 2012, its business model was half-baked but investors understood the financial dynamics of internet advertising, which gave them a starting point to assess the company. There are lots of comparable companies to measure the value of young business software firms like Slack Technologies Inc., which is also aiming to go public soon.