Lyft Files its IPO, Will Become the First Ride-Hailing Company to Go Public
Lyft Inc. filed for a U.S. initial public offering (IPO) today, becoming the first ride-hailing company to go public The IPO filing has also lifted the lid on Lyft's financial picture, giving investors a first look at the company's financial information.
Lyft applied to list shares on the Nasdaq Global Market under the symbol "LYFT."
According to Bloomberg, Lyft filed with an initial offering size of $100 million as a placeholder amount that is subject to change. The IPO is being underwritten by JPMorgan Chase & Co., Credit Suisse Group AG and Jefferies Financial Group Inc.
Lyft's detailed 220 page prospectus provides a closer look at the company's financial picture, which has never been known before. Lyft launched its service in June 2012, when it was known as Zimride before changing its name to Lyft.
Lyft's Revenue Doubled in 2018
According to the filing with the Securities and Exchanges Commission, Lyft reported a $911 million loss in 2018 and the company reported revenue of $2.2 billion. Although the loss is nearly $1 billion, the company's revenue doubled in 2018, from $1.1 billion in 2017. Lyft reported a loss of $688 million in 2017.
The San Francisco-based ride hailing company completed over 30.7 million rides last year in the U.S. and Canada, which resulted in gross bookings of $8.1 billion. The company says to have 1.9 million drivers working as independent contractors, although many of these drivers also work for Lyft's biggest U.S. rival Uber, so the numbers of drivers exclusively working for Lyft is not clear.
Year-over-year growth also slowed in 2018, falling from 130 percent in the first quarter to 94 percent in the fourth quarter.
After raising an additional $600 million in funding in June 2018, Lyft valuation was $15.1 billion, nearly double that what it was in 2017.
Investment banks have pitched valuations for the company ranging from $18 billion to $30 billion, people familiar with the matter said to Bloomberg in December, but since December Lyft's valuation has narrowed to $20 billion to $25 billion, according a person familiar with the matter.
Lyft's IPO is not without significant challenges, many center around the company's use of independent contractors as drivers instead of employees.
Lyft's biggest rival Uber is facing pressure and lawsuits from its drivers, to categorize them as employees, and offer benefits, something Lyft and Uber do not do. Uber been hit with dozens of lawsuits claiming that its drivers are employees, and should be entitled to minimum wage, paid overtime, and other legal protections not afforded to contractors.
Although Lyft has not addressed the use of contractors in its IPO, the ride-hailing is offering some of its top drivers a chance to participate in the company's IPO.
Lyft is offering some of its most dedicated drivers a cash bonus that they can use to buy shares in the IPO, it said in a statement. The bonuses vary, and will range between $1,000 to $10,000 for drivers in good standing.
Many Lyft drivers also work for rival Uber (Richard Vogel/AP/File)
Lyft is testing the waters so to speak as the first ride-hailing company to file an IPO. Investors may be wary however, due to the fact that no other ride-hailing company has achieved profitability and it is unclear that if they ever do, whether or not it can be sustainable, especially now that Silicon Valley companies are planning to enter the ride-hailing market using autonomous vehicles.
Lyft's IPO filing identifies companies that will likely compete with it in the future, including Alphabet's Waymo (the self-driving arm of parent Google), Apple, Baidu and Zoox as well as many other unnamed technology companies and automobile manufacturers and suppliers.
Lyft addresses this in it IPO filing with the SEC in a clear statement acknowledging that it facing facing growing competition in the ride-hailing space known as "transportation as a service" (TaaS) that might scare off some investors looking for long term growth.
"We have incurred net losses each year since our inception and we may not be able to achieve or maintain profitability in the future. We incurred net losses of $682.8 million, $688.3 million and $911.3 million in 2016, 2017 and 2018, respectively. Our expenses will likely increase in the future as we develop and launch new offerings and platform features, expand in existing and new markets, increase our sales and marketing efforts and continue to invest in our platform. These efforts may be more costly than we expect and may not result in increased revenue or growth in our business."
Lyft's biggest rival Uber plans to file its own IPO later this year, which might be more attractive to investors. Some estimates value Uber at $120 billion, which will make it the biggest IPO of all time by a wide margin.
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