Lyft Beats Uber to the IPO Punch

Lyft filed paperwork to open a round of funding to raise upwards of $100 million in its initial public offering.  Depending upon investor demand, this suggested placeholder amount has the potential to change.   This IPO will list on the Nasdaq Composite index as “LYFT.”

This is just one of many on a long list of startups that have billion-dollar valuations and are poised to enter Wall Street.  With that, then, 2019 looks to be quite the year, with entrance expected from the likes of Airbnb, Pinterest, Postmates, and Uber.  And Lyft’s going to market could be the sounding board for the others looking to make the same move, in terms of reception from investors.  Particularly, Lyft will likely be viewed as the beacon for what Wall Street can expect from its rival, Uber, who is significantly bigger than Lyft. 

This is important, then, for both Lyft and Uber as both are hemorrhaging money.  In 2018, for example, Lyft posted a net loss of $911 million, up from $688 million the year prior.  By comparison, Uber lost $1.8 billion last year.

Listing its preponderance of risk factors, Lyft warned “we have incurred net losses each year since our inception and we may not be able to achieve or maintain profitability in the future.”

This history of losses will certainly come into play with investors.  Common to the tech sector, investors will have to consider these losses against the attraction of one of the fastest growing businesses in an equally escalating industry.  

Of course, while both Uber and Lyft offer similar services in the same industry, they are really not the same type of business.  Lyft launched first and continues to market itself as a straightforward, casual and friendly ride-sharing service.  Uber, whose aggressive marketing has pulled it ahead of its predecessor, has a much darker and harder reputation, characterized by its [former] CEO Travis Kalanick black car service vision to allow him and his friends to “roll around San Francisco like ballers.”

After workplace controversies, Uber suffered boycotts and, while performing damage control, Lyft continued to raise money and expand.  It has nearly doubled its market share to 39 percent, by the end of 2018. 

All this in mind, Lyft stated, in its SEC IPO S-1 document, “We are laser-focused on revolutionizing transportation and continue to lead the market in innovation.  We have established a scaled network of drivers and riders, or users, brought together by our robust technology platform that powers millions of rides and connections every day.”  

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