As an alumnus of the ride hailing / sharing or perhaps simply taxi company, Lyft (you can tell the direction I’m heading here), I decided to take a look at the ridesharing industry and compare the returns of what was over the 2010s, a *very* sexy industry versus an extremely unsexy industry.
Both of these companies were started in 2009, right from the depths of the Great Financial Crisis. While markets are bleeding out today, the S&P hit 666 in March of 2009 versus its level of 3666 as of yesterday’s close.
The first company is Uber, a company that turned out to be an absolute gorilla in the domain of rapid growth amid major regulatory hurdles. It dominated business news headlines for years for myriad reasons. It raised capital at quantums that were unthinkable and unprecedented. It had ambitions of global reach and rapid product expansion. Amid much drama the company finally went public in 2019.
The second company is Athene, the unknown annuities provider that serves retirees via effectively what are products similar to CDs and slightly higher octane products. It was seeded by Apollo, went public in 2016 and was taken private by Apollo in 2022.
Over the course of 2009 to 2022, here is (1) how much money, roughly speaking, each company raised:
| Company | Common Equity Raised |
| Uber | $39B |
| Athene | $4B |
Here is how much money, again roughly speaking, that each company has generated. I’m talking GAAP *net income* – not an adjusted EBITDA figure.
| Company | Retained Earnings | Dividends and Stock Repurchases |
| Uber | ($30B) | $0 |
| Athene | $11B | $2B |
If you wholly owned both companies, you would be looking at a cumulative net income amount on invested capital of:
Uber: 0.23X
Athene: 3.25X
Furthermore, on 2021 numbers, Athene generated north of $2B in earnings. Uber? It lost ~$500M (with the understanding that its earnings are very lumpy, it lost $7B the year prior on write downs and the pandemic).
To conclude, Athene traded at ~5-6x GAAP earnings and has been growing at ~teens growth rates since 2009. It didn’t miss a beat during Covid, in fact it signed a major M&A deal in May of 2020 in the thick of it.
Sexy companies draw a large supply of buyers that start to wash over the context of the company’s absolute success. While some of these companies that lose a huge amount of money ultimately end up being the proverbial “Amazon” – many do not. As an investor, one has to examine what they believe they know that the the entire market doesn’t.
But perhaps to make life easier and increase the odds of success, one just has to find pockets where few even care to play…
Disclosure: We own shares of Apollo (which owns Athene), this is not investment advice. Do your own work.
For those curious, here are Lyft’s numbers:
Paid in capital: $9.7B
Retained earnings: ($8.5B)