Musings on Markets: Valuing Lyft Ahead of Its IPO
Aswath Damodaran provides a comprehensive valuation and pricing analysis of Lyft ahead of its initial public offering, valuing the company at approximately $16 billion ($59 per share) based on a narrative-driven DCF model. The analysis examines the ride-sharing business model, competitive dynamics with Uber, and the critical assumption that operating margins will improve from -42% to +15% as drivers transition from contractors to employees and the market consolidates. Damodaran contrasts valuation with market pricing, noting that investor comparables to other ride-sharing companies and Uber create a much wider pricing range ($5 billion to $30+ billion) driven by hype rather than fundamental value.
Metrics in this report
9.97%percent
percentile
75th percentile of all US companies; assumed for young, money-losing Lyft at IPO
10%percent
Lyft probability of not surviving as a going concern given current losses
911million dollars
As disclosed in prospectus
40%percent
Projected steady-state share of US transportation services market
-42.25%percent
Lyft 2018; projected to improve to +15% at steady state
15%percent
target
Lyft steady-state assumption when drivers are employees and market consolidates
26.77%percent
Lyft 2018 actual; author assumes reversion to 20% at steady state
2.50dollars
Lyft revenue per dollar of capital invested; expected for technology company
120billion dollars
Current addressable market; author assumes doubling over 10 years
59dollars per share
Lyft valuation based on 279 million fully diluted shares
50dollars per share
Lyft valuation excluding $2 billion IPO proceeds
5-22billion dollars
Range using Uber and global average peer multiples; extends to $30B+ with Uber's rumored pricing