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Uber, Lyft, Other Hot IPOs & ETFs: What You Need to Know (Part II)

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  • (2:15) - Breaking Down Lyft's Current Valuation
  • (5:30) - Will Lyft Set The Bar For Uber’s IPO Valuation 
  • (9:10) - Overview of the Pinterest IPO 
  • (12:15) - Slack Valuation Going Into IPO
  • (16:20) - Is There Still Growth Potential From These Highly Valued Companies?
  • (19:00) - Episode Roundup: Podcast@Zacks.com

In a special edition of ETF Spotlight, we take a deeper dive into the tech IPO wave. A number of highly valued tech unicorns are racing to go public this year.  In fact, 2019 could be the biggest year ever for IPOs.

In the second part of this edition, I talk to Dr. Haran Segram, professor at NYU Stern School of Business. He teaches courses in Investments and Valuation. We dig deeper into valuations of some of these unicorns.

Lyft is expected to start trading this Friday. The company has approximately 39% share of the ride-sharing market in the US. It had revenues of $2.16 billion last year, while the net loss was $911 million. It plans to offer about 35.4 million shares.

WSJ reported yesterday that Lyft is expected to price its shares above the previously targeted range of between $62 and $68 per share, which means it could be valued at more than $23 billion. What could it be really worth? Prof. Segram explains how he has calculated Lyft’s valuation.

Uber—the most anticipated IPO of the year--could seek a valuation of approximately $120 billion. It has a large global presence whereas Lyft is focused on the US and Canada. Yesterday, it announced plans to acquire the Middle Eastern rival Careem. The deal, valued at $3.1 billion, would be Uber’s largest so far.

Uber’s business model is more diversified with Uber Eats, logistics, self-driving cars, bike sharing etc.  It lost $1.8 billion last year.

As the two ride sharing giants prepare to go public, which one could be a better bet for investors? Tune into the podcast to learn more.

Pinterest, which lets users “pin” ideas on digital boards, has 265 million monthly active users. It had revenues of $756 million and a net loss of $63 million, in 2018. The company that released its IPO prospectus last week, is valued at approximately $12 billion.

Slack, the workplace-messaging company, filed for its IPO last month. The company could seek a valuation of about $7 billion.

These unicorns chose to remain private for so many years, as private funding was not an issue for them. Why are they rushing to go public this year?

Considering they remained private for such a long time, the days of high growth may be behind them. Amazon AMZN and Microsoft MSFT were worth about $500 and $780 million respectively, when they went public. Google GOOGL had a valuation of $26.4 billion. Facebook (FB - Free Report) was much bigger-- $104 billion at its IPO.

Can investors still get rewarded for investing in these unicorns when they go public? What else do investors need to know about investing in IPOs?

Note: In the first part, I am joined by Kathleen Smith, Chairman and co-founder of Renaissance Capital, a global IPO investment advisory firm.  In case you missed it, you can find it here:

Uber, Lyft, Slack, Pinterest, Other Hot IPOs & ETFs: What You Need to Know

Please visit NYU Stern if you want to learn more about Prof. Segram’s research. Make sure to be on the lookout for the next edition of ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com.

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