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Equity Valuation Project James Luo, Peter Shi, Harrison Wang, Lisa Wang, Lucy Yao Company Price DCF Value Per Share Pricing Multiple Relative Regression Price Per Share Market Regression Price Per Share Recommendation LYFT $10.89 $8.04 EV/SALES $15.73 $30.84 SELL DASH $62.37 $36.97 EV/SALES $23.21 $57.35 SELL DUOL $120.61 $44.91 EV/SALES $19.96 $27.14 SELL ISRG $304.88 $235.89 EV/EBITDA $213.31 $140.90 SELL RACE €269.50 €105.60 EV/EBITDA € 72.19 € 141.49 SELL

Lyft (NASDAQ: LYFT) Valuation Performed by Harrison Wang 1. Company Overview: The Fallen Ride-Sharing Giant Lyft is a software company founded in 2012 with operations in the U.S. and select Canadian cities. It went public through an IPO in 2019 and is the second biggest ride-sharing platform in the U.S. after Uber. The company offers ride-sharing services for cars, scooters, and bicycles through its mobile app. Although it participates in the transportation industry, Lyft brands itself as a technology company that serves to connect riders and drivers. Lyft calculates fares in real-time using a dynamic pricing model based on the supply and demand of vehicles at the time a ride is hailed. Lyft receives a commission from each ride booking. Lyft has suffered heavy operating losses for the past three years due to the effects of the COVID-19 pandemic and a slowdown in the demand for ride-sharing services. The company has seen its highest ridership levels in the three years at 20.4 million riders in Q4 2022. This demonstrates a road to recovery from the pandemic that will continue to gradually increase Lyft’s revenues and cash flows. The recent layoffs (~26% of its workforce) signal that Lyft's path to profitability is shifting heavily towards reducing operating costs, which will improve their margins in the coming years. Yet, Lyft is drastically losing market share to Uber, which not only has a stronghold over the ride-sharing industry (~74%) but has also successfully expanded into massive verticals such as food/grocery delivery and freight shipping. Meanwhile, Lyft operates almost purely in ride-sharing. Uber has also made more steps towards international expansion, while Lyft only retains a presence in North America. Lyft has recently made aggressive attempts to price-match Uber, which sets up a more competitive environment where both firms must differentiate themselves to consumers on the basis of brand name, services, and reliability. Thus, Lyft is exposed to the risk of changing consumer attitudes if its management remains hesitant with regards to growth and diversification. The main question is whether Lyft can still catch up to Uber and reclaim the market share that it lost, or if it is simply a losing battle. 2. DCF Valuation ● Revenues: I expect a recovery in revenues from low pandemic demand levels as more people travel, go out for leisure, or commute to their offices. Pricing competitively with Uber can also result in increased transaction volume, further bolstering Lyft’s revenues. I predict that Lyft will expand into new businesses, which would increase revenues as well. ● Operating Margin: I expect operating margins to improve, aided by reducing operating costs (namely wages) and achieving scale through higher ridership. The industry average operating margin for software companies is 21.81% as of 1/1/2023 due to fairly low

overhead overall. However, I am targeting a margin of 10% for Lyft because of the immense SG&A costs associated with acquiring new drivers/riders and maintaining current ones. Incentivizing users is where Lyft must focus to play catch up with Uber. ● Tax Rate: Since Lyft is a money-losing company, I expect that its effective tax rate will adjust to the U.S. marginal tax rate of 25% once the firm improves its margins and starts making taxable income several years down the line. ● Sales-to-Capital Ratio / Reinvestment: I expect Lyft's recent performances and slipping market share to encourage management to invest more heavily in growth over the short-term in new services (food delivery, freight, car rentals, etc.), updated software, and partnerships/acquisitions to bolster their business lines. But at a certain point in the future, their growth ambitions will taper off as they reclaim market share; they will reinvest less as the company matures. ● Return on Capital: I estimate that the return on capital will increase as Lyft emerges from its current money-losing condition and invests heavily over the next few years to expand its technological capabilities, networks, and services offered. ● Cost of Capital: As Lyft becomes more profitable and less risky, I expect the cost of capital to eventually converge to the industry average cost of capital by year 10. ● Beta: I estimated that the beta will be the same as the industry average for software. ● Risk-Free Rate: I used the 10-year treasury bond yield as of the date of the valuation. 3. Relative Valuation Subjective Analysis: EV/Sales Regression Analysis: EV/Sales vs. 2-Year Revenue Growth & Net Income Margin Comparable Firms: Using CapitalIQ, I chose 19 comparable North American companies with similar characteristics to Lyft. Since there are very few ride-sharing software companies, I had to consider the trade-off between a small group of firms that are just like Lyft (e.g. Uber) and a larger sample of firms that are similar in only some dimensions. I chose to go the latter route, so I also selected firms within the transportation-as-a-service industry (e.g. car rental agencies like

Hertz or Avis) or ride-sharing apps that focus on only one specific mode of transportation (e.g. Bird Global with electric scooters). Regression Equation: Since Lyft is a money-losing company, I decided to plug the year 10 forecasted DCF values into the sector regression equation. This is because investors would want to buy Lyft for how much they will make in the future. EV/Sales = .929 + .1413(.0333) + 1.428(.1) = 1.077 EV year 10 = 1.077 * 11,024,245.09 = 11,867,858.16 PV of EV = 11,867,858.16 / 1.0863 10 = 5,186,414.62 Value of common stock = EV + Cash - Debt - Options = 5,186,414.62 + 1,796,792 - 803,353.37 - 6527.48 = 6,173,325.77 Implied Pricing per share = 6,173,325.77 / 392,470.32 shares outstanding Implied Pricing per share = $15.73 4. Market Valuation Regression Equation: EV/Sales = 2.32 + 2.60g + 10.60 Oper Margin - 1.40 DFR - 3.50 Tax rate Pricing: I plugged year 10 values into the regression, like I did above in the relative valuation. EV/Sales = 2.32 + 2.60(.0333) + 10.60(.1) - 1.40(.20) - 3.50(.25) EV/Sales = 2.31 Expected EV year 10 = 2.31 * 11,024,245.09 = 25,442,022.58 PV of EV = 25,442,022.58 / 1.0863 10 = 11,118,695.54 Value of common stock = EV + Cash - Debt - Value of Equity Options = 11,118,695.54 + 1,796,792 - 803,353.37 - 6527.48 = 12,105,606.69 Implied pricing per share = 12,105,606.69 / 392,470.32 shares outstanding Implied Pricing per share = $30.84 5. Final Analysis Lyft’s current share price is $10.89, which is higher than the DCF value per share of $8.02 by 35.4%. However, the current share price is lower than the relative valuation and market valuation implied pricing per share, which are $15.73 and $30.84 respectively. The ride-sharing software business is an incredibly small market with few comparable companies, so the pricing in that sector cannot be explained by the fundamentals available today. Therefore, the sector and market regressions provide imperfect pricing estimates. Based on the assumptions I made in my intrinsic valuation, I believe Lyft is currently overvalued and I recommend to SELL.

DoorDash Inc. (NYSE: DASH) Valuation Performed by James Luo 1. Company Overview: Too Much Faith in Food Delivery DoorDash is a technology company that connects users with local restaurants and businesses through an on-demand delivery app. However, they have never achieved profitability in their 10 years of existence and it faces intense competition in the coming future. It will try to make investments and acquisitions that will help them keep their competitive edge with their 59% market share and expand further, but this is costly and slows their path to profitability even further. Over time, margins will improve through actions such as increased penetration of their DashPass and expanded non-restaurant categories. DoorDash has also been trying to trim their operating expenses recently with layoffs of 1,250 corporate employees (6% of their employees) and it must keep a watch on their expenses if they want to ever achieve profitability. DoorDash has achieved recent success in adding new categories and in international markets, but will also have to deal with inflationary pressures impacting consumer spending. To summarize, DoorDash will have margins improve over time due to increased penetration of their DashPash, expanded categories, and through trimming their operational expenses but still has to face the hardship of turning a profit. 2. DCF Valuation

● Revenue : DoorDash has been trying to expand into new segments with non-restaurant categories and a premium subscription of their DashPash, but as more competitors enter the market, I believe that revenue growth will slow. ● Operating Margin : I expect that over time margins will improve through economies of scale and successful acquisition integration to 13%. DoorDash is still currently growing and margins will gradually increase when they slow their focus on growth and turn to focus on their user base. The increased penetration of the DashPash and expanded sale of non-restaurant categories will improve sales with premium DashPash users growing to 32 million users (up 30%) in the past year. DoorDash themselves have been attempting to reduce operating expenses such as wages and with their subscription model and competitive edge in market share, I expect their revenues to stabilize and expenses to decrease with greater efficiency. The industry average operating margin for software companies is 21.81% as of January 2023, but even with their efforts, DoorDash faces immense operating costs to maintain their market share and keep their competitive edge. ● Tax Rate : I expect that DoorDash will reach the Global/US marginal tax rate over time. ● Reinvestment : I expect that DoorDash will maintain their reinvestment at their current level in an attempt to keep their competitive edge and their market share. ● Return on Capital : I believe that the return on capital will increase over time as DoorDash improves their efforts to reduce their operating expenses and leverage their competitive edges of market share. ● Cost of Capital : I expect that the cost of capital will be close to the median of companies in this space. With all these assumptions, I arrived at a value of $36.97 which is 40.72% overvalued relative to the current stock price of $62.37. 3. Relative Valuation Subjective Analysis: EV/Sales Regression Analysis: Ev/Sales vs LTM EBIT Margin & Annual Revenue Growth Comparable Companies: From my market research, I found a sample of 17 public firms operating in the US, Canada, Europe, or China. Because there are very few public food delivery platform firms, I had to balance the trade off of very few firms similar to DoorDash vs a large sample of firms similar in some dimensions. I made the decision to include firms that deliver their own food to its customers to my sample as well. Regression:

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