Lyft, Uber, Pinterest, Slack and Airbnb are headed for the IPO market this year. But don’t obsess over their initial public valuations too much.
That’s according to Alan Patricof, the venture capitalist and early big tech investor. He said the initial stock price of those companies will be driven by excitement and will take a while to settle.
“It’s a confusing time,” Patricof, the co-founder and managing director of Greycroft LLC, told CNN chief business correspondent Christine Romans during the “Markets Now” live show Wednesday.
Lyft is set to begin trading on the Nasdaq as soon as next week. The ride-sharing company set a price range that will value it at about $20 billion.
Patricof said Wednesday that amateur investors will likely buy into the latest round of big-name IPOs because “people want to own a piece of America.”
“The institutions are a lot more informed,” he added. “They’ll make a lot more rational decisions, but they also want to mark up their portfolio and they don’t want to miss out.”
But it will take a few quarters — and at least a couple of earnings reports — for the markets to decide what the companies are truly worth.
Patricof said while ride-sharing firms Uber and Lyft are a huge hit among consumers, they aren’t making any money.
Lyft, for example, was nearly $1 billion in the red last year. The company may not turn a sizable profit until 2023.
“We’ve got to see those figures turn around at some point,” Patricof said.
Greycroft, which focuses primarily on private equity, does have a stake in electric scooter company Bird. It’s also backing other startups, such as media company Axios, micro-investing app Acorns and grocery delivery service Boxed.
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