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Uber vs. Lyft: Will There Be a Winner in This IPO Battle?

Written by Monica Savaglia
Posted December 11, 2018

It’s all happening as expected. Uber and Lyft are racing each other to the initial public offering (IPO) finish line.

These are two of the biggest ride-hailing companies on the market right now, and both companies have been teasing a 2019 IPO for some time. And now that reality just got even more real.

Last week, on December 6th, Lyft announced that it had confidentially filed its IPO documents with the U.S. Securities and Exchange Commission. Lyft didn’t announce any specific details on its IPO, like how many shares it will offer or the price range of the stock.

In Lyft's last funding round, led by Fidelity in past June, it was valued at $15 billion. The company saw its estimated value double compared to where it was only 14 months ago.

Uber and Lyft File IPO Documents on the SAME Day

Both Lyft and its competitor Uber have enticed investors. The companies are two of the largest and fastest-growing privately held companies in the U.S. Investors have been anticipating IPOs from both Lyft and Uber, and when it was announced that both companies were aiming for a 2019 IPO, the anticipation grew even greater.

Uber didn’t want Lyft to get all the hype, so on December 7th, it announced that it also confidentially filed paperwork on Thursday to go public. It’s happening. Two of the biggest and most anticipated tech companies are going to make their stock market debuts in 2019.

This is going to be a close race. Both companies have been aiming for an IPO in the first half of 2019, but of course, that all depends on the climate of technology IPOs and the fear of a potential economic recession. Waiting to go public could also be harmful because the market might worsen as the year progresses. This is the hardest decision for companies deciding when to take the plunge into public territory. Timing is everything.

What We Know Now About Uber and Lyft

Lyft’s valuation is a lot smaller than Uber’s, and because Lyft is a private company with less than $1 billion in annual revenue, in accordance with the 2012 JOBS Act, it can start the IPO process but doesn’t have disclose its financial results. However, when Lyft gets closer to its IPO, it will need to begin making those types of financial announcements as it meets with investors.

However, there are a few financial indicators about Lyft worth noting. Back in January 2016, General Motors made a $500 million investment in the company. And earlier this year, Lyft was valued at $15 billion. Obviously, Lyft isn’t valued as high as Uber, but its rapid pace of growth is supposed to make up for that.

In 2017, Lyft doubled its rides... 375.5 million trips, to be exact. This was a 130% increase from the number of rides recorded in 2016.

Some are skeptical of Uber because right now it’s unprofitable. In the third quarter of 2018, the company reported a loss of $1.07 billion. Uber has had a troubled past few years, with press about the company internally and about a driverless car hitting a person, resulting in the death of that person.

Uber’s CEO, Dara Khosrowshahi, who took over the role back in August 2017, has been focused on eliminating parts of Uber’s business that are cash sores. He sold off its operations in Russia and Southeast Asia, which faced heavy competition from rival companies.

Uber has also taken aim at expanding its business in areas with expected high growth, like food delivery and bike and scooter rentals.

Lyft vs. Uber

As of October 2018, Uber had 69% of the U.S. market, while Lyft had 28%. Uber has a huge chunk of the market share, but Lyft is definitely catching up.

According to data gathered in a survey of 1,062 U.S. consumers, investment firm Raymond Jones said, “While Lyft trails Uber in share, it does have a highly engaged user base — we found that Lyft users actually use the service more frequently than Uber users.”

If Lyft users are more loyal and more likely to choose Lyft over Uber, that could leave room for Lyft to capture Uber users or even new users who have never used a ride-hailing service before. This could ultimately lead to Lyft taking some of the market share away from Uber.

A 2019 IPO for Uber will most likely make it a huge IPO milestone for next year. Investors have been interested in Uber for some time, so its IPO will be highly anticipated. Market debuts from both of these companies will contribute to what looks like a very profitable IPO market in 2019.

There are two sides to the story when looking at IPOs. Yes, we love the highly valued tech startups looking to make their debut because, well, they are tech companies with a lot of value. And a lot of investors love the idea of investing in a company while shares are low and then watching those share prices increase.

But on the other side, you want to make sure those companies are going to last for years to come to make even more gains. Investing in a company that may no longer exist in the next few years would be pointless.

You want to invest in the “next Apple” or the “next Amazon” — companies that are going to exist while also growing their business and revenues in the years to come. If you bought shares around the time Amazon IPO’d in 1997 and kept those shares until today, you would have around 9,000% gains.

That’s the type of success story you want to be a part of. Stay up to date on the IPO market by clicking here. Knowledge is the first step.

Until next time,

Monica Savaglia Signature Park Avenue Digest

Monica Savaglia

Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.

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