Uber, Lyft rush to­ward IpOs


Faced with a volatile stock mar­ket and eco­nomic un­cer­tainty, the ride-hail­ing ser­vices are mov­ing more ur­gently to go pub­lic

For years, Uber and Lyft put off go­ing pub­lic. Now, they are speed­ing up.

Faced with a volatile stock mar­ket and the prospect of an eco­nomic down­turn next year, the ride-hail­ing ser­vices have moved more ur­gently to­ward an ini­tial pub­lic of­fer­ing, said four peo­ple with knowl­edge of the com­pa­nies’ plans, who were not au­tho­rized to speak pub­licly.

Lyft Inc. orig­i­nally aimed to list its shares to­ward the mid­dle of 2019, but it be­gan mov­ing more quickly af­ter the re­cent stock mar­ket sell­off and be­cause of a de­sire to go pub­lic be­fore Uber Tech­nolo­gies Inc., said two of the peo­ple. On Thurs­day, the com­pany, which was most re­cently val­ued at US$15-bil­lion, an­nounced it had filed con­fi­den­tially for an IPO.

Uber has also has­tened its IPO clock. The com­pany had once said it was look­ing to fall 2019 to go pub­lic, but has pushed that tim­ing up be­cause of con­cerns that a re­ces­sion might be com­ing, said two peo­ple fa­mil­iar with the plans. Uber could now go pub­lic as soon as April, they said. In­vest­ment banks have told the com­pany it could be worth as much as US$120-bil­lion in an IPO.

The moves by Lyft and Uber in­di­cate how tricky it can be to de­cide when to go pub­lic at a time when stock mar­kets have been tur­bu­lent and the broader eco­nomic pic­ture is mud­died. The cal­cu­lus for when a com­pany pub­licly lists its shares is of­ten a mov­ing tar­get, but Uber’s and Lyft’s ac­tions will carry par­tic­u­lar weight with a swath of other highly val­ued Sil­i­con Val­ley star­tups that are also pre­par­ing to ap­proach the pub­lic mar­kets.

Airbnb Inc., the on­line room rental com­pany, plans to be ready to go pub­lic by mid-2019, al­though it has not set a for­mal time­line, said a per­son with knowl­edge of the mat­ter. Slack, the on­line col­lab­o­ra­tion com­pany, has said it is ready­ing for a pub­lic of­fer­ing, but has no spe­cific time­line.

“Com­pa­nies that were talk­ing about 2020 have been told that the win­dow may not be open as long as pre­vi­ously thought,” said Bar­rett Daniels, a partner at Deloitte who ad­vises on IPOs. He said he was telling com­pa­nies that “if an IPO is in your plan, I would prob­a­bly be get­ting ready now.”

Any stock mar­ket de­buts of these com­pa­nies will be the fi­nal chap­ter of the era of “uni­corns,” the pri­vately held star­tups val­ued at more than US$1-bil­lion. Many of these com­pa­nies, which were born af­ter the 2008 re­ces­sion, rode a wave of smart­phone adop­tion, turn­ing busi­nesses such as taxis or gro­cery de­liv­ery into on-de­mand ser­vices. They also ben­e­fited from abun­dant cap­i­tal from pri­vate in­vestors, which was driven by low in­ter­est rates.

For years, many uni­corns were in no rush to go pub­lic be­cause they could grow eas­ily with money from pri­vate in­vestors and away from the scru­tiny of Wall Street. In 2016, Travis Kalan­ick, Uber’s co-founder and then-chief ex­ec­u­tive, spoke for many tech star­tups when he said at a con­fer­ence that his com­pany would go pub­lic “as late as hu­manly pos­si­ble.”

Those at­ti­tudes have shifted as in­vestors and tech em­ploy­ees have in­creased pres­sure on the com­pa­nies to go pub­lic so they can cash in their shares.

“The forc­ing fac­tor is: How do you deal with is­sues of em­ployee re­ten­tion?” said Rick Heitzmann, a man­ag­ing di­rec­tor at FirstMark Cap­i­tal, which is an in­vestor in uni­corns such as Pin­ter­est and Airbnb.

But the see-saw­ing stock mar­ket, a trade war with China and other coun­tries and un­cer­tainty over the di­rec­tion of the econ­omy are all weigh­ing on IPO de­ci­sion-mak­ing. Few ex­ec­u­tives want to take their com­pa­nies pub­lic when in­vestors’ ap­petite for shares may be ebbing.

“Com­pa­nies that were wait­ing for ev­ery­thing to be per­fect be­fore go­ing pub­lic might have been bet­ter off go­ing when things were good enough,” Mr. Heitzmann said.

Sandy Miller, a ven­ture cap­i­tal­ist at IVP, said sev­eral com­pa­nies were meet­ing with po­ten­tial in­vestors far ahead of fil­ing for an IPO, in what are known as pre-road­show events. “That’s the only way to re­ally know what kind of re­cep­tiv­ity you’re go­ing to have” from the pub­lic mar­kets, he said.

Mr. Miller said he ex­pected a ro­bust year for IPOs next year, but com­pa­nies may not want to wait un­til too late in the year to file.

Some uni­corns are sidestep­ping the un­pre­dictabil­ity al­to­gether. We­Work, an of­fice rental com­pany val­ued at US$45-bil­lion, has been widely named as an IPO can­di­date. But in Novem­ber, the com­pany agreed to sell an ad­di­tional US$3-bil­lion of shares to its main in­vestor, SoftBank’s Vi­sion fund. That deal has al­lowed We­Work to push plans for a pub­lic list­ing fur­ther into the fu­ture, said a per­son fa­mil­iar with the com­pany.

For Uber and Lyft, the big­gest ques­tion they face from pub­lic mar­ket in­vestors is whether their busi­nesses can be prof­itable. Ex­pand­ing a ride-hail­ing ser­vice re­quires out­lays to re­cruit drivers in mul­ti­ple cities, which can quickly get ex­pen­sive. Uber said last month that it lost US$1.07-bil­lion in the third quar­ter, as it spent to in­vest in new ar­eas such as bi­cy­cles, scoot­ers and freight ship­ments.

In­side Uber, Dara Khos­row­shahi, the chief ex­ec­u­tive, has raced to pre­pare the com­pany to go pub­lic. Over the past year, the com­pany has over­hauled many of its in­ter­nal pro­cesses, from items as small as cre­at­ing more for­mal sys­tems for ex­pense re­ports to global safe­guards that en­sure le­gal com­pli­ance in ev­ery area where Uber op­er­ates.

Go­ing pub­lic sooner could give Uber a num­ber of ad­van­tages. It would mean raising fresh out­side cap­i­tal, pro­vid­ing the com­pany am­mu­ni­tion to pur­sue ac­qui­si­tions and other op­por­tu­ni­ties. And it would en­able Mr. Khos­row­shahi to po­ten­tially re­shape Uber’s board be­cause cur­rent mem­bers can be asked to leave when there is a liq­uid­ity event such as an IPO, ac­cord­ing to the com­pany char­ter. Uber’s board has grap­pled with a his­tory of in­fight­ing.

Lyft is likely to still go pub­lic ahead of Uber be­cause it has al­ready filed for an of­fer­ing. In a state­ment on Thurs­day about its con­fi­den­tial IPO fil­ing, Lyft said it had not yet de­ter­mined how many shares would be sold or their price range.

Com­pa­nies that were wait­ing for ev­ery­thing to be per­fect be­fore go­ing pub­lic might have been bet­ter off go­ing when things were good enough. RICK HEITZMANN MAN­AG­ING DI­REC­TOR AT FIRSTMARK CAP­I­TAL


A Lyft ride-hail­ing car dis­plays an il­lu­mi­nated sign in Los An­ge­les in 2017. Af­ter the re­cent stock mar­ket sell-off, the com­pany is mov­ing to list its shares.

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