Uber, Lyft, Airbnb and Pinterest: These are just a few of the companies eyeing the public markets this year.
And while now considered household names, financial experts say that doesn’t necessarily mean you should buy.
Ride-hailing company Lyft filed its IPO prospectus on Friday, following reports that it expects to be valued between $20 billion and $25 billion. The company’s filing showed it had $911 million in losses and $2.1 billion in revenue last year.
Experts say you should still proceed with caution if you’re thinking of getting in on this deal or any of the other upcoming high-profile IPOs.
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People need to ask themselves whether they consider Lyft a technology stock, a transportation stock or a platform, said financial advisor David W. Karp, co-founder of independent wealth specialist firm PagnatoKarp in Reston, Virginia. “It may be a combination of all three of them, and then you have to decide what kind of valuation it should command,” he said.
While these companies’ industries may grow, it remains to be seen whether they will do so profitably, Karp added.
“People fall in love with a service or a product or a platform,” Karp said. “We’ve seen throughout history that great services, great products don’t necessarily make great businesses.”