Uber confidentially files for IPO in race against Lyft Company

uber

From the fear of being outdone by Lyft, Uber also privately filed a public offering recently, The news comes one day after Lyft publicly declared that it had filed its filings with the Securities and Exchange Commission in confidence. With both companies at the beginning of their IPO, it will be an interesting race to see which company will stand out first in the market. The two companies, despite their core businesses, are very different both in terms of private market valuation and revenues. Lyft, the smaller of the two companies, operates only in the United States and Canada and focuses primarily on carpooling. Uber’s business is a sprawling global business with an attached food delivery business, although it has pulled out of a few key markets,including China, Russia, and Southeast Asia. The two companies have been rivals since the beginning and it seems that the competitors continue to compete over who gets to come out on top. Lyft announced recently that it is the first to confidentially file an S-1 draft with the Securities & Exchange Commission.According to Lyft’s statement, the number of shares to be offered and the price range have not yet been determined. Private investors recently valued the company at $ 15.1 billion after a $ 600 million round in June 2018. Private financing has not been uncommon for ground-level companies since Lyft and its rivals have raised billions of dollars to expand their respective businesses.However, the first test will determine whether the investor appetite for these money-losing businesses is greater. Lyft’s third-quarter revenue reached $ 563 million but lost $ 254 million. Meanwhile, Uber reported revenue in the third quarter of $ 2.95 billion. It lost $ 1.07 billion in the quarter.

Fierce Competition

The size difference between the financial statements of the two companies reflects the scale of their activities. Lyft operates only a mobile service in the United States and Canada. However, it uses autonomous vehicles through a few partnerships and the company has recently finalized the purchase of Motivate, the owner of Citi Bike. On the other hand, Uber is present through out the world and also carries out food distribution activities. They also invested heavily in motorcycles and scooters after the acquisition of Jump in early 2018. The Lyft file kicks off what is supposed to be a hot 2019 for IPOs in the technology sector. Bankers estimated between $ 18 billion and $ 30 billion worth of valuations for the Lyft IPO. Uber, whose value is currently estimated at about $ 70 billion, has begun negotiations with banks to determine the price of an IPO of up to $ 120 billion. Also, on the IPO component, the Airbnb start-up, which shares its homes, is currently valued at $ 31 billion. Airbnb CEO Brian Chesky said his company plans to be ready for the IPO by July 1,2019, and recently hired Amazon’s long-time CEO Dave Stephenson to become his new finance director. But unlike Lyft and Uber, Airbnb claims to be a profitable business.

Lyft Looks Promising

The good news is that Lyft is growing faster and losing less money than Uber. Lyft’s third-quarter revenue of 2018 jumped 88 percent to $ 563 million,coupled with a massive $ 254 million net loss. It is a much faster growth than Uber, which saw its revenues increase by 38% to 2.95 billion dollars, with a loss of 1.07 billion dollars. Lyft has nearly $ 5.7 billion in cash. Given that consumers know its brand so well, it would have a significant advantage over unprofitable technology companies that sell poorly known technologies to retail investors. So, if Lyft can go public in the spring and continue to grow at its current rate, it would not be surprising to see its valuation almost double from June, thanks to its revenue growth rate of close to 88%.

About Anand Sai 87 Articles
Anand Sai, A Research Consultant with 5+years of experience in handling research operations of various domains.

Be the first to comment

Leave a Reply