Lyft IPO promises roads to everywhere

Drivers can be owners too.                  Getty Images

Drivers can be owners too. Getty Images

An illuminated sign appears in a Lyft ride-hailing vehicle in Los Angeles, Calif., on September 21, 2017.

Ride-sharing company Lyft filed paperwork for an initial public offering (IPO) on Friday, putting it on the path to becoming the first USA ride-hailing company to list on the stock market.

By making its filing public Friday, Lyft has kicked off what could become a race to the public markets for a glut of startups that have raised billions from private investors. The company lost $911 million a year ago, bringing its total losses to almost $3 billion since 2012 while raking in $5.1 billion in venture capital.

The company reported $2.2 billion in revenue in 2018, however, it lost $911 million over the same time period.

The company has discussed the possibility of expanding globally but so far has operated only in the U.S. and Canada.

The company is racing its larger ride-sharing rival Uber to list its stock. Lyft's revenues doubled in 2018 to reach $2.2 billion, according to the filing.

The move has been widely expected after Lyft disclosed in December that it confidentially filed a draft registration statement with the Securities and Exchange Commission related to its initial public offering.

Lyft filed an initial offering size of $100 million, a placeholder amount as the company plans for a total market valuation of between $20 billion to $25 billion.

Uber, a larger company with a more diverse set of businesses, needs several more weeks for its IPO preparations.

Uber has a much more substantial global presence, which is one of the reasons behind its higher valuation.

At a $25 billion valuation, Lyft would be trading at almost 12 times its annual revenue.

Lyft said it is only at the very early stages of tapping into the trillion dollars spent every year on transportation in the US.

Companies must release the formal version of the filing before their roadshow.

Matt Kennedy, a senior IPO market strategist at Renaissance Capital, which provides institutional research on public offerings, said that it was possible Uber would bite back and that Lyft's growth would decline. Market share climbed at the same time, and Lyft now holds 39 percent of the USA market as measured by trips, the filing shows. By 2012, the pair had renamed their company Lyft and shifted the business to providing brief local trips, mimicking taxi rides.

Lyft does not expect to make much money in the near future on its expansion into bike and scooter renting.

The rapid rise in the number of bookings on the platform made possible by the company's scalability-first mindset allowed Lyft to secure 39 percent of the ridesharing market in the U.S.

But Lyft's 2018 acquisition of Motivate, a bike-sharing network, is not expected to materially increase revenue in the short term, according to the filing. That could cut the per-mile cost for passengers by up to 80 percent while also expanding the size of the potential market, reckon executives at Cruise, the autonomous-driving division run by General Motors - which owns 8 percent of Lyft.

Latest News