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Lyft to Launch its IPO Roadshow Next Month, Setting Up to Be the First Ride-Hailing Company to Go Public

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【Summary】San Francisco-based ride-hailing company Lyft Inc plans to launch the roadshow for its initial public offering during the week of March 18, making it the first U.S. app-based ride-hailing company to file plans for an IPO.

Eric Walz    Feb 21, 2019 2:12 PM PT
Lyft to Launch its IPO Roadshow Next Month, Setting Up to Be the First Ride-Hailing Company to Go Public

San Francisco-based Lyft Inc plans to launch the roadshow for its initial public offering during the week of March 18, making it the first app-based ride-hailing company to file plans for an IPO, people familiar with the matter said on Wednesday. The roadshow is designed to create some buzz for investors ahead of the IPO—with the goal of raising more money.

Lyft is beating out its chief rival Uber with its IPO push. According to Reuters, Uber Technologies Inc needs several more weeks of preparations before it can file its IPO.

Lyft expects to be valued at between $20 billion and $25 billion in its IPO, the sources said, adding that the roadshow is expected to last about two weeks. The sources warned that the plans were still subject to change and market conditions.

Lyft declined to comment.

If Lyft gets to list its shares first, it would avoid being judged on metrics that will be applied to Uber, which remains the leader in ride-hailing in terms of size. Initial estimates from investment bankers predict Uber to reach up to a $100 to $120 billion valuation, sources have said.

Lyft's Rise

Lyft, was valued at around $5.5 billion just three years ago after a $500 million investment from General Motors in 2016.

Lyft also experienced an uptick in growth in 2017 after Uber was rocked with multiple scandals including reports of sexual harassment from senior managers and developing "greyball" software to deceive city regulators. The scandals led to the ousting of its CEO and co-founder Travis Kalanick.

In Jan 2017, Uber tried to break a taxi strike at JFK Airport in New York after city cab drivers organized a protest against President Trump's immigration travel ban. During the driver's protest which encouraged cab drivers to boycott the airport for one hour, Uber eliminated its surge pricing on trips to the airport promote its own service.

The action angered many people and led to the "#DeleteUber" campaign on Twitter. Many of Uber's customers switched to using Lyft. The campaign give Lyft an unexpected bump in new customers, without it having to spend money on advertising.

Lyft & Uber Still Chasing Profitability

Both Lyft and Uber are still trying to reach profitability, and a IPO by either company will force them to eventually find a path towards profitability to please investors, and some of that work is already underway.

Both Lyft and Uber invested heavily in electric scooter and e-bike startups including Lime and Jump that threatened to lure away riders. In November 2018, Lyft announced it acquired Motivate, the parent company of Citibike. Motivate is the largest bike-sharing operator in the U.S.

The two ride-hailing companies are also facing new competition from Waymo, which is launching a commercial ride-hailing service using a fleet of its own autonomous driving vehicles. The pilot is already underway in Arizona.

Reuters reported that Uber's 2018 revenue was $11.3 billion, up 43 percent from the prior year. However, its losses before taxes, depreciation and other expenses was $1.8 billion, a slight improvement over the $2.2 billion loss posted in 2017. While Uber has slowly been cutting its losses, it still a long way from reaching profitability.  

Unlike Lyft which operates only in the U.S. and Canada, Uber has a global reach and operates in about 70 countries. However, a big part of Uber's business growth lately is moving food instead of people. Uber CEO Dara Khosrowshahi said that "Uber Eats", its food delivery business, has experienced rapid growth.

"Eats is an exploding business in a good way" Khosrowshahi said onstage at Code Conference at Rancho Palos Verdes, Calif. last July. "It's now at a $6 billion bookings run rate, growing over 200 percent."

Lyft's revenue more than doubled in the first half of 2018 to $909 million, while its net loss expanded at a slower rate than a year earlier, technology news website The Information reported in Sept 2018.

Lyft's net loss grew by 46 percent to $373 million, with the company losing 41 cents for every dollar of revenue, an improvement from a year earlier when the company lost 62 cents, the report said.

Last week, Reuters reported that Lyft has prepared some earnings metrics it hopes will persuade investors that it will not be in the red for long, which might be OK for now.

Early investors in Lyft or Uber are more likely be focused on growth and potential for future profitability rather than an overnight windfall.

resource from: Reuters

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