United States based ride hailing company Lyft Inc is trying to be the first ride hailing company to be traded publicly and would flaunt its fast growth in the United States as its main attraction points for investors for the IPO, according to media reports quoting sources with knowledge of the matter.
The reports claimed that the share of Lyft in the US market is set to increase from 35 per cent in 2018 to almost 40 per cent now and this point is being planned to be sold to investors by the company. This growth has been because of its aggressive expansion into smaller and mid-sized cities which has increased the cities that it currently serves in America and Canada at 600 which is a three-fold increase compared to the number in at the beginning of 2017.
There is pressure on the San Francisco-based Lyft to attract potential investors for the IPO through its prospects as it remains in a close race to be the first ride hailing US firm to launch IPO. It is expected that the IPOs from either one of the companies would be launched by the second quarter of 2019.
One of the advantages of Lyft winning the race to the IPO is that it would help it to avoid judgement in terms of its valuation because it would be the first to be publicly valued.
In terms of size, still the largest ride hailing company is Uber and the company increased its third quarter 2018 revenues by 38 per cent year on year at $2.95 billion. In addition to be operational in more than 70 countries worldwide, the company is also into some other verticals including freight hauling, autonomous driving, food delivery, air taxis and artificial intelligence research.
In comparison, US and Canada are the only markets where Lyft is operational. The company has been very focused on its core market and has never revealed its financials. According to estimates by analysts, the valuation of Lyft is between $20 billion and $30 billion where as it is expected that the valuation of Uber could be as high as $120 billion. Therefore it is obvious the Lyft would not be able to rival Uber on its size and operations and therefore plans to bet its fortunes on portraying itself to a more attractive investment destination for IPO investors compared to its rival Uber.
Uber has been rocked by a series of scandals in 2017 which has benefited Lyft. Such scandals include charges of sexual harassment against senior managers by its female employees resulting in the ouster of the chief executive officer of the company. Another scandal was the use of illicit software to deceive regulators. Lyft did not have to expend much money on marketing for attracting new drivers and riders because of the negative publio9city received by Uber because of the scandals.
According to analysts, the focus of IPO investors would be on the growth prospects of the ride hailing companies and the possibility of profits in the future because both the companies currently are making losses. According to media reports quoting sources, some form of earnings metrics is being prepared by Lyft which it hope would be enough for attracting investors into believing that the losses it is incurring currently would not continue for long.
(Adapted from Reuters.com)