It seem all the unicorns are going public at once.
That's not a coincidence, according to a few unicorn experts.
Lyft (LYFT) - Get Report , and unicorns Uber, Pinterest, Slack and AirBnB, all seem to be planning to offer shares to the public at the same time. They're "absolutely" trying to issue shares while tech stocks are flying high, Santosh Rao, head of research at Manhattan Venture Partners, told TheStreet; the Nasdaq has risen 20% year-to-date. "After the longest-running bull market, they [unicorns] don't want to get caught on the other side of it." Rao added that "these companies want to get out [and issue stock]" now.
Others agree. "The Nasdaq is performing better than any time in the same time period over the past six years... That being said, I don't think Uber should wait," Alejandro Ortiz, principal analyst at Sharespost, told TheStreet recently. "We don't know where we'll be six months from now, so while sentiments are up, it's a good time to go public."
How Can Lyft Be Valued, If It's So Far From Profitability?
First off, let's acknowledge Guggenheim analysts, who noted recently that "limited visibility on the path to profitability" is a core risk to Lyft, as its "valuation is challenging." Lyft's net loss in 2018 of $911 million represents a 210% increase over that of 2017. Lyft would ideally like to increase its take-rate or increase its prices, but both are difficult, as it's in intense competition with Uber, Juno, and Via for drivers and riders. Other profitability factors, both on the revenue and cost side, will be of primary focus for Lyft. But even as it potentially nears profitability, capital expenditures won't abate soon, as the company looks to invest in scooters and bikes, pressuring free cash flow.
So how can investors arrive at a valuation level for a company that isn't exactly close to generating positive cash flow consistently?
Sign up for the In Case You Missed It newsletter to see the answer from a top expert.
UnitedHealth (UNH) - Get Report , RealMoney's stock of the day, beat earnings estimates, posting earnings per share of $3.73 a share on an adjusted basis, beating estimates of $3.60. Management raised its full-year 2019 adjusted EPS forecast to between $14.50 and $14.75 from its prior estimate of $14.40 to $14.70. Still, the stock fell 5.06% to $218.55, bringing the rest of the sector down with it. See why here. Watch the video above to see more on United Health.
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