.Breakingviews columnists followed the rise and fall of shared-office startup WeWork, through its fast growth, inflated valuation, and ultimately its abandoned IPO and CEO ouster. Read the full e-book:
Snagging even 1% of a multi-trillion-dollar market is an alluring goal for a startup. It’s also the sort of ambition that makes an attractive case for all kinds of fast-growing but loss-making companies, including those going public, like Uber Technologies, Lyft and WeWork. But investors faced with inflated estimates for just how much custom these newbies can rustle up should don their skeptical hats.
Lyft is somewhat less exuberant, claiming only that it addresses “a substantial majority” of a $1.2 trillion consumer transportation market in the United States, its main focus along with Canada. Uber’s growth in this line of business is slowing, despite snagging only around 2% of that amount in gross bookings last year. Total revenue and ride-sharing bookings both increased around 20% in the first quarter from a year earlier, according to the company’s estimates. By contrast, both surged more than 40% in 2018 from 2017.
That’s huge as a potential market goes. But the contrast with $200 trillion of real-estate asset value – or even the $10 trillion or so of annual rents that might represent, assuming a 5% global yield, or cap rate as it’s known – is stark.
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