What We Can Expect from Lyft and Uber IPOs
When you’re calling a ride, you likely want the one that arrives first. But that’s not all you’re looking for: you want to know that you’ll be comfortable and safe as well.
When it comes to ridesharing IPOs, Lyft, the boys in pink, are the ones who have arrived first. But does that mean that they’re the best bet going forward?
It has been reported that when Lyft goes public, which could be as soon as the end of the month, their plan is to ask for $62-$68 per share, a price that would put their valuation at $21-$23 billion. That’s a big jump from their previous private valuation, which sat a $15.1 billion in 2018.
Lest we think all is rosy, net losses widened considerably in 2018, to $911 million, up from $688 million the year before. But in that same time, revenue more than doubled, which coincided with a tripling of riders from 2016-2018. On the whole, the barometer is very positive.
It’s clear that Lyft will list first (say that five times!), but will they list loudest? Don’t get it twisted, Uber is still the big dog in this yard. They already have plans to go public shortly after Lyft debuts, with a road show to lure in the big fish investors following shortly thereafter.
Clearly, Uber has the huge majority of the market shares, with a roughly 70/30 control of the market. Its name, like Kleenex and Tylenol, is synonymous with the service it provides. And it’s valuation when it goes public is expected to be around $120 billion, roughly six times that of Lyft.
But as with their competition, all is not blue skies at Uber. For one thing, its losses are much larger than Lyft’s, at over $1 billion in Q3 alone. Coupled with the controversy that surrounds the company, including the messy and very public ousting of founder and former CEO, Travis Kalanick, there are plenty of blemishes on their record.
With all of that said, expect that these IPOs will be big wins for both companies. After all, they came from the same city, and have provided the same service through the same means for many years now. There’s no reason to believe they can’t coexist.
Uber will be the bigger name in the early going, but they also have more to lose. Lyft, for their part, will be looking for opportunities to eat into Uber’s control of the market, and may try and leverage their IPO to do so. A big win in this race could be huge for Lyft, and they’ve already got a huge advantage: they’ll be out of the gate first.