Friday, Mar 29th 2019

Lyft's IPO: Buyer Beware


We surveyed ~40 hedge funds, and most were not positive on Lyft's IPO. Long-term fundamentals were their main concern.

Lyft, the #2 player in what has been deemed to be a winner-take-all market, is opening to the stock market. We surveyed ~40 hedge fund investors in our first Titan Insider Pulse

Insider Pulse##

  • 70% of hedge fund investors we surveyed were not positive on Lyft
  • The main reasons: intense competition (Uber), weak profits (e.g. lots of free Lyft rides), and lofty valuation
  • The 30% of funds that were positive said it was mostly for technical reasons like investor demand, not for fundamentals

Our Take##

  • We too are concerned about Lyft's long-term fundamentals
  • The market is clearly massive ($1.2T transportation market) and Lyft has built a strong network of drivers/riders and a top-notch culture
  • However, Lyft hasn't proven to us that it can sustainably grow without sacrificing profits on each ride via free rides and other promotions
  • That said, the stock could rip in near term due to temporary technical factors like scarcity ("only ride-sharing stock on the market")

Unit Economics##

  • Lyft, like Uber, has been subsidizing rides for quite some time, with help from the venture capital industry
  • With ride prices artificially low in our opinion, rider demand could weaken once prices normalize higher
  • Key question: can Lyft add more drivers and more riders without incentivizing both sides with promotions and free rides?


We're excited about Lyft's large addressable market. However, its unit economics are much less proven. Competition is intense, and valuation seems priced for perfection (no room for error as a business). Put them all together, and the long-term fundamentals seem mixed to us.

Back to Research ↗

Learn with titan

Investment articles and resources

Become the smartest investor you've ever been through straightforward, easy-to-read investment articles.

What Is Residual Income & How Is It Calculated?

What Is Fundamental Analysis?

What Is Technical Analysis & How Does It Work?

How to Invest in Hedge Funds

Let's Get Started

Ready to become a client?

Create an account with us in two minutes.

Or scan to get the app

We're building the best investment platform, ever

Titan Global Capital Management USA, Inc ("Titan") is an investment adviser registered with the Securities and Exchange Commission (“SEC”). By using this website, you accept our Terms of Use and Privacy Policy. Titan’s investment advisory services are available only to residents of the United States in jurisdictions where Titan is registered. Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are hypothetical in nature and may not reflect actual future performance. Account holdings are for illustrative purposes only and are not investment recommendations. The content on this website is for informational purposes only and does not constitute a comprehensive description of Titan’s investment advisory services.

Refer to Titan's Program Brochure for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Titan’s fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Brokerage services are provided to Titan Clients by Titan Global Technologies LLC and Apex Clearing Corporation, both registered broker-dealers and members FINRA/SIPC. For more information, see our disclosures. Contact: 508 LaGuardia Place NY, NY 10012. Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice. Check the background of these firms on FINRA's BrokerCheck.

© Copyright 2022 Titan Global Capital Management, Inc. All Rights Reserved.