Lyft, Uber, Pinterest: Are internet unicorns really worth billions?

A stream of these businesses - which are defined as private, venture capital-backed firms worth over $1bn - are set to follow, including Lyft's rival Uber, online scrapbook company Pinterest and home-sharing site AirBnB. And they are attracting some staggering valuations. Which has been around for well over a century, Lyft is only seven years old - and it is yet to make a profit. Lyft makes some big claims in its initial public offering prospectus. "The question really for everybody and for investors," he said, "Is whether Lyft and Uber's business model will allow them to convert these very substantial losses into profits at some point... and whether the market will sustain those losses." Prof Strebulaev said: "What I believe, and this is not really about Uber and Lyft, but an average unicorn, is that there are 100-plus of them and it is difficult to imagine based on historical evidence and my research that all of them are going to be successful."

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