Reflections on the APLUSS IPOs so far, Uber+Lyft+regulators+autonomy, and listener Q&A

Ben Gilbert (0:00)

Hello, Acquired Limited Partners.

We hope you had a wonderful Memorial Day weekend. If you are in the US, Dave and I are coming to you bright and early Monday morning on Memorial Day.

David Rosenthal (0:09)

Yeah, happy Memorial Day.

Ben Gilbert (0:11)

We wanted to do a Q&A episode because over the last couple of months, we've gotten some awesome questions from LPs, and we've been stockpiling them since our LP episodes of Late have been specific about a topic or with a guest, and we cherry picked a bunch of our favorites today. Some of which have to do with all the IPOs that have happened. And so we want to do a little section before we dive into Q&A here to kind of just give an update on each of these IPOs, specifically their share prices, so sort of how it's gone with a little bit more time. Granted, we don't have 6-12 months behind us, but we have more than the initial day of trading to go off of. And kind of a couple of remarks about this class so far that we are in the middle of.

So David, do you want to take us into IPO updates?

David Rosenthal (1:00)

We've covered 3 of the Apluss IPOs so far, Lyft, Pinterest and Uber. There has also been Zoom, which we are going to cover on our next main show episode we're going to release today. It's going to be on Electronic Arts with founder Tripp Hawkins. This is going to be great. Can't wait for that to drop. Probably the next episode after that, we are going to cover Zoom with a very special guest, board member Santi from Emergence has agreed to join us. That's why we've been holding off on that one. But to start with the beginning here, Lyft. Oh man, I remember another, well, it wasn't a holiday morning, but it was a Saturday morning running into the office early to record. We were very excited. Lyft priced at $72 a share.

We might have recorded a little early on that one.

As everyone probably knows, it fell off the cliff from there. It's trading at $57 right now.

Ben Gilbert (2:00)

The way we left out, I think, was that it traded up a little bit.

David Rosenthal (2:04)

It spiked. I think it went up into the 80s. There was so much pent-up demand and pent-up euphoria around it.

Ben Gilbert (2:12)

Yeah. Then the next week saw that initial slide.

David Rosenthal (2:16)

Yeah.

It's since stabilized. I believe at $57 a share, it's right around $16 billion market cap. So, a fall off a cliff is harsh, but the initial euphoria has certainly been dampened around Lyft and that carried into Uber, which we'll get to in a minute.

Ben Gilbert (2:34)

A few folks have asked, so what happened?

I think, David, you nailed it that the pop that Lyft had was a proxy for people's excitement about a big set of tech IPOs in general. And then I think the sort of sobering, I guess, over the last few weeks has really been a reflection of evaluating, one, their intense, intense competition with Uber, but then sort of looking at the business a little bit more independently rather than emblematic of a class of companies.

David Rosenthal (3:04)

I think the other thing that happened was when the Uber S1 hit and people started really digging into Uber and the dynamics leading up to their IPO, and people started realizing, like, shoot, where's the path to profitability of any of these companies? And I think that set off a lot of alarm bells, obviously for Uber and for Lyft too. But what's interesting is that if you look at the other IPOs, Zoom and Pinterest, they, contrasted with Lyft and Uber, have traded up since the IPO and Zoom, astoundingly so. So Zoom, priced at $36 a share, is now trading at $76 a share.

Notably, it is the only company of this set that is actually profitable, and I believe quite profitable.

Pinterest, priced at $19 a share, is now trading at $26 a share, had traded up quite a bit and then came down when they reported Q1 earnings. I believe it came down because while revenue growth was strong, losses were larger than expected. So I mean, clearly, the biggest thing that's going on with these IPO's right now is that the public markets are sending a very, very clear signal to everyone that profitability, either path to or ideally as evidenced by Zoom, actual profitability is something that they value very highly.

Ben Gilbert (4:20)

It is interesting to note with Uber, they priced at $45 and they're trading at $42. I think that if you didn't look at any numbers and just took the temperature of the media landscape right now, you would walk away feeling like if I had to take a guess at their share price, it'd be a lot lower than 42