Ricks Picks

Why Lyft and Uber IPOs Are Sucker Bets


The timing of Lyft’s IPO last week could not have been better for Wall Street insiders, since they will have an opportunity to unload their shares into a veritable orgy of greed and ignorance. The stock market looks unstoppable at the moment, and it is making Lyft’s $24 billion valuation seem somehow less absurd. Just four months ago, when shares were in the throes of what many of us mistook for a bear market, the prospect of taking Lyft public must have seemed not merely unappealing to its owners but grim. The company had no earnings at a time when investors were diving into defensive stocks. How things have changed! What might have been a march to the gallows now promises to become a wilding spree as investors clamor for profitless unicorns. Who needs earnings in a bull market that will continue forever?

In this heady climate, there is unlikely to be any serious discussion about why Lyft could prove to be such a bad bet. Naysayers have questioned whether the ride-hailing service can earn money. But their arguments have focused mainly on whether Lyft’s far larger competitor, Uber, would doom the firm’s chances for success in a market where Uber itself has been unable to turn a profit or even to figure out how. Regardless, it’s safe to assume the companies will continue to beat each other’s brains in even as the ‘creative destruction’ they leave in their wake lays waste to the world’s taxi fleets and perhaps even the automobile industry.

The REAL Competition

But there is yet another competitor as yet unrecognized by investors. I am referring to Tom, Dick and Harry, you and I, our neighbors and colleagues; for any one of us could create a ride-hailing service practically overnight using do-it-yourself software that does everything Lyft’s and Uber’s does and more.

I know this because I have been chauffeured in vehicles owned and driven by entrepreneurs who charge less than Lyft/Uber; who offer better service, including a free stop or two en route to a destination; who allow the scheduling of rides weeks in advance in markets where Lyft and Uber do not; and who have been building word-of-mouth business successfully. For a shot at being truly their own bosses, and at recruiting others to work for them, these individuals are willing to take somewhat less than the $13.70/hour reportedly earned by Uber drivers (that is before car expenses, by the way). It is predictable that many will take this leap. There are many thousands of them eager to get off the minimum-wage treadmill. It is the American way for workers to seek better. Over time, they will pick away at Uber’s and Lyft’s already low margins and win over customers with frills that Uber and Lyft shareholders will disdain to provide.

Creative Destruction

If a $24 billion valuation for Lyft seems absurd, consider that Uber’s handlers will be looking for five times that, or around $120 billion. Investors had better wise up to the fact that the same creative destruction that Uber and Lyft have unleashed on the transportation world has not run its course, not by a longshot. The endgame will be great in any case for fare-paying riders, but anyone who thinks shareholders are about to clean up is delusional.

Comments on this entry are closed.

John Jay April 1, 2019, 7:29 pm

And at the rate penniless vagrants are swarming over our Open Borders, we will all become Micro Entrepreneurs, competing for fares in our Havana level jalopies, selling chicle, flores, and naranjas, at the freeway off ramps.
While the Commandant of the USMC says deployment of his boys to defend OUR borders
” has forced him to cancel or reduce planned military training in at least five countries,”
Hard to credit that response from General Neller, but it certainly fits the “Dude! Where’s my Country” emotions I have been experiencing since I moved to California in 1975!
The merger of the United States with Mexico and Central America is now a fait accompli.
Slowly at first, then all at once!

Hidden Pivot Graduate
Help Page

Click here
for a help page needed as a Hidden Pivot Graduate.

Keep Your
Skills Current

Click here
for a special deal for graduates of the Hidden Pivot Course who want to stay on the cutting edge


Start a Subscription
Lost my password

Seminar Information page.

Tuesday, August 20, 2019

The consistent accuracy of Rick Ackerman’s forecasts is well known in the trading world, where his Hidden Pivot Method has achieved cult status. Rick’s proprietary trading/forecasting system is easy to learn, probably because he majored in English, not rocket science. Just one simple but powerful trick -- managing the risk of an ongoing trade with stop-losses based on ‘impulse legs’ – can be grasped in three minutes and put to profitable use immediately. Quite a few of his students will tell you that using ‘impulsive stops’ has paid for the course many times over.

Another secret Rick will share with you, “camouflage trading,” takes more time to master, but once you get the hang of it trading will never be the same. The technique entails identifying ultra-low-risk trade set-ups on, say, the one-minute bar chart, and then initiating trades in places where competition tends to be thin.

Most important of all, Rick will teach you how to develop market instincts (aka “horse sense”) by observing the markets each day from the fixed vantage point that only a rigorously disciplined trading system can provide.

The three-hour Hidden Pivot Course is offered live each month. If it’s more convenient, you can take it in recorded form at your leisure, as many times as you like. The course fee includes “live” trading sessions (as opposed to hypothetical ‘chalk-talk’) every Wednesday morning, access to hundreds of recorded hours of tutorial sessions, and access to an online library that will help you achieve black-belt mastery of Hidden Pivot trading techniques.

The next webinar will be held on Tuesday, August 20. Click below to register or get more information.

Knowledge Base Link