Lyft became the first ride-hailing app to go public on Friday, skyrocketing to a $23.4 billion valuation.
But don’t get too excited for drivers. Investments in Uber and Lyft are basically big bets on future products like autonomous vehicles, not the people behind the wheel.
As we’ve seen, Lyft isn’t profitable. Last year it lost nearly $1 billion. So it’s not Lyft’s cash flow bringing in investors — it’s the company’s growth and the potential of its platform.
“Wall Street is infamous for caring more about growth than profits,” said Investing.com senior analyst Clement Thibault in an email. “Lyft is likely to get a pass on profitability if it can manage to continue its impressive growth streak.” Read more…