A plethora of high-growth tech companies are all going public at once.
For retail investors trying to get exposed to any upside there, figuring out how to differentiate between the offerings can be overwhelming.
Pinterest vs. Lyft vs. Zoom
Pinterest and Lyft are both unprofitable, high growth tech stocks and they both saw their stock prices soar in the opening trades. Pinterest opened up 25% at $23.75 a share, after pricing its IPO at $19. Similarly, Lyft ran up 21% above its $72 offer price to $87 on its first trade. Pinterest's offer price implied a price-to-sales ratio of 17, while Lyft's offer price implied a price-to-sales of just under 10, still high.
But the two differ in one key way: path to profitability.
Pinterest has had narrowing net losses, while Lyft has had widening net losses. Pinterest's net loss in 2018 was $63 million, a huge improvement over its 2017 net loss of $130 million. Lyft, meanwhile, saw a net loss of $911 million in 2018, 32% worse than its net loss in 2017 of $688 million.
The consensus on Wall Street on Lyft so far is that its path to profitability isn't so visible. That's much less the case with Pinterest. Working in Lyft's favor, though, is the fact that the ride-sharing market could be as big as $120 billion by 2025, according to Guggenheim analysts, plenty enough for both Lyft and larger rival Uber, which is also set to go public soon.
Pinterest, on the other hand, will have some challenges with expansion. While it's looking to grow its user base outside the U.S., its average revenue per user abroad is well under $1, compared to more than $3 in the U.S.
As for Zoom (ZM) , which also debuted on Thursday, it's already profitable with a net income in 2018 of $7.6 million. It's a much smaller company, however, with revenue of $330 million in 2018, but clearly the market sees real growth prospects.
With that comes a valuation that could scare some investors off. Shares opened at $65 a share, up 81% from an initial offer price of $36. This implies a trailing price-to-sales ratio of 51, far higher than the already-high valuations for Pinterest and Lyft. Whether it's worth it is another matter.