Ride-Hailing Firm Lyft Races to Leave Uber behind in IPO Chase
Lyft’s public issue will test investors’ appetite for the ride-hailing business
Joshua Franklin &
Ride-hailing company Lyft beat bigger rival Uber Technologies in filing for an initial public offering (IPO) on Thursday, defying the recent market jitters and taking the lead on a string of billion-dollarplus tech companies expected to join Wall Street next year.
Lyft’s IPO will test investors’ appetite for the most highly valued Silicon Valley companies and for the ride-hailing business, which has become a wildly popular service but remains unprofitable and has an uncertain future with the advance of self-driving cars.
San Francisco-based Lyft, last valued at about $15 billion in a private fundraising round, did not specify the number of shares it was selling or the price range in a confidential filing with the Securities and Exchange Commission (SEC).
Lyft could go public as early as the first quarter of 2019, based on how quickly the SEC reviews its filing, people familiar with the mat- ter said. Lyft’s valuation is likely to end up between $20 billion and $30 billion, one source added.
The ride service was set up in 2012 by entrepreneurs John Zimmer and Logan Green and has raised close to $5 billion from investors. While it continues to grow faster than its larger competitor, Uber, it is also losing money.
Flag in the Ground
The filing by Lyft, which hired JPMorgan Chase & Co, Credit Suisse and Jefferies as underwriters, plants a flag in the ground to go public before larger rival Uber. The race between them is one of the most closely watched in Silicon Valley.
A provision included in an investment by SoftBank into Uber requires the company to file for an IPO by September 30 or the company risks allowing restrictions on shareholder stock transfers to expire.
Uber investor Mitchell Green, a partner at Lead Edge Capital, said Lyft going public first bodes well for Uber, because if Lyft trades at a high multiple, the much-larger Uber will command even more money.
“Lyft has built a very US-based rideshare business that has done well,” Green said. “If public market investors get excited about that they are really going to get excited about a business that is 5X the size.”
Earlier this year, Lyft said it had 35% of the US ride-hailing market. The company operates in the US and Canada while Uber is in much of the world and has other businesses including freight-hailing and food delivery.
Both Uber and Lyft have lost huge sums of money by spending heavily competing with each other for passengers and drivers and entering new markets, although they have recently raised prices and reduced subsidies. The companies have held out the promise of boosting profitability by eventually replacing human drivers with robots piloting autonomous vehicles, but a future of cities and suburbs crisscrossed by fleets of self-driving cars is years away, given the technical and regulatory challenges, particularly in the US.
Both Uber and Lyft have lost huge sums of money by spending heavily competing with each other