On Friday, riding sharing giant Lyft publicly filed an S-1 initial public offering application with the Securities and Exchange Committee (SEC). The filing application revealed that last year, Lyft saw a loss of $911.3 million on $2.2 billion in revenue.
The losses and revenue both significantly increased from 2017. During that year, Lyft saw losses of $688 million on $1.1 billion revenue. And in 2016, the losses were $682 million on $343 million in revenue. As of December 2016, Lyft had a 22% ride-sharing market share and today it is at 39%.
Lyft’s filing says that it has a history of net losses and the company “may not be able to achieve or maintain profitability in the future. The company said it is going to continue spending as it expands to more locations.
And Lyft’s public offering is going to be led by JPMorgan Chase, Credit Suisse, and Jefferies. And Lyft is going to have Class A shares (carries one vote each) and Class B shares (carries 20 votes each). The public offering will include Class A shares.
Lyft could raise as much as $100 million from the IPO and it will trade under the “LYFT” ticker on the Nasdaq.
In 2016, Lyft generated $1.9 billion in bookings followed by $4.6 billion in 2017, and $8.1 billion last year. Now Lyft has 18.6 million active riders, 30.7 million total riders, and 1.1 million regular drivers out of 1.9 million total.
The SEC prohibits ride-sharing services from giving stock grants to drivers. So Lyft will be giving cash bonuses to certain drivers with “good standing.”
For example, drivers with more than 20,000 rides by February 25, 2019, will receive up to $10,000. And drivers with over 10,000 rides would receive up to $1,000 along with past and present members of Lyft’s Driver Advisory Council. These payments are expected to be sent out around March 19.
“We believe that the world is at the beginning of a shift away from car ownership to Transportation-as-a-Service, or TaaS. Lyft is at the forefront of this massive societal change. Our ridesharing marketplace connects drivers with riders and we estimate it is available to over 95% of the U.S. population, as well as in select cities in Canada,” said Lyft in the filing via TechSpot. “In 2018, almost half of our riders reported that they use their cars less because of Lyft, and 22% reported that owning a car has become less important. As this evolution continues, we believe there is a massive opportunity for us to improve the lives of our riders by connecting them to more affordable and convenient transportation options.”
Lyft did not disclose what price it is planning to list. In Lyft’s last round of funding, it was valued at $15 billion. However, Lyft is reportedly aiming for a market capitalization of between $20 and $25 billion after going public. On March 18, Lyft is planning to meet with potential investors as part of its “roadshow.” And the roadshow is reportedly going to last about two weeks.
By going public in April, it means Lyft would be going public before its largest rival Uber. When Uber goes public later this year, the company could be valued at $120 billion.
Lyft was founded by Logan Green and John Zimmer in 2007. Originally, the company was called Zimride and it was used for connecting carpoolers for long distance trips. And in 2012, the company completely pivoted to a ride-sharing taxi-like service.
Green and Zimmer could become billionaires from the IPO as each of them own millions of shares of Class B stock — which ensures that they maintain significant control of the company.
Some of Lyft’s biggest investors include Rakuten, General Motors, Fidelity, Andreessen Horowitz, and Google’s parent company Alphabet.
When Lyft first started out, it distinguished itself from Uber by placing playful pink mustaches to the front bumpers of vehicles. And steering away from controversies have been giving Lyft a competitive advantage.
PitchBook emerging tech analyst Asad Hussain put together a report about the expected performance of the companies following their public debuts. In the report, it was determined that Lyft is better positioned for a favorable public debut due to the clearer growth story for investors.
“As Lyft and Uber prepare to IPO, we believe the two companies present two fundamentally different investment propositions—with the former representing an investment into the US ridesharing industry, and the latter representing an investment into a global, bundled, Mobility-as-a-Service platform. Although we recognize the growth potential for Uber’s business, we remain more confident in Lyft given its more focused business model,” Hussain said.
While some analysts believe that Uber and Lyft would be susceptible to a bear market and receive lower valuations and lower capital raised compared to bull markets, Hussain pointed out that companies like Uber and Lyft are insulated from this trend due large scale and maturity. Hussain said that the median valuation of a tech IPO in 2008 was only $106 million while Uber and Lyft have a combined valuation of more than $100 billion.
Another reason why Lyft is poised to have a successful public debut is that it is focused primarily on the U.S. ridesharing market, which is a much cleaner growth story to investors compared to Uber’s strategy of pursuing lower-margin international markets along with untested markets like food delivery. And Lyft recently achieved 40% market share in the U.S., up from 35% last year — meaning it took away market share from Uber.
“We believe Lyft chose to list ahead of Uber so as not to be burdened by the dominant ridesharing player’s likely lower valuation multiple and associated scrutiny surrounding its slowing growth profile, numerous corporate controversies, and somewhat unfocused future growth strategies,” added Hussain.