When ride-hailing operator Lyft filed for its IPO last week, it was not much of a surprise. But the filing from rival Uber two days later was a surprise. The company’s CEO, Dara Khosrowshahi, had previously noted that an offering would come during the second half of next year. But now it looks like the Lyft and Uber IPOs could hit the markets at roughly the same time — say in March or April!
Keep in mind that both of the upcoming IPO filings were done on a confidential basis — that is, the S-1’s will not made public until a few weeks before the roadshow. Despite this, there is still quite a bit of information available.
So let’s take a look at these upcoming IPOs:
Uber IPO
The roots of Uber, which was initially called UberCab, go back to 2009, during the depths of the financial crisis. Travis Kalanick, a tech entrepreneur, was frustrated that he had to shell out a huge fare to get a private driver during New Year’s Eve.
He knew there had to be a better way. And he realized that his trusty smartphone was the answer. By May 2010, the service was launched and it was an instant hit. But along the way, there was much controversy, as many localities and tax companies fought back against Uber.
While Kalanick’s hard-charging approach worked to disrupt the industry, this culture did get out of hand. Uber had to deal with allegations of sexual harassment, theft of trade secrets and even spying on competitors.
To deal with these issues, Uber brought in Khosrowshahi, who has wasted little time in changing the culture. Before joining the firm, he led Expedia Group (NASDAQ:EXPE). In other words, he has the chops to lead a fast-growing, large organization.
As for the Uber IPO, the company is the clear leader in the industry and it is the most valuable private company in the world, with a market value of $76 billion. The company has raised close to $20 billion (which includes debt financing) and investors include TPG Growth, Toyota Motor (NYSE:TM), Fidelity and T. Rowe Price Group (NASDAQ:TROW).
Uber currently has close to 70% of the U.S. market, with Lyft at only 28%. As for the revenues, they came to $2.95 billion in the latest quarter, up 38% on a year-over-year basis. Note that this was below the 63% growth ramp during Q2. The company also continues to lose money. The net loss was $939 million in Q3.
But Uber does have a large global footprint (there are operations in 70 countries). The company has also expanded into other categories like freight, food delivery (UberEats), bikes and self-driving cars.
Lyft IPO
In 2012, Logan Green and John Zimmer founded Lyft. It actually came out of a company they created called Zimride (which was focused on long-distance ride sharing). But the founders realized that the Uber model was much more attractive. And to standout, the company used creative marketing strategies, such as having drivers place pink mustaches on their front fenders.
Unlike Uber, Lyft did not engage in aggressive overseas expansion. Consider that the company has operations in the U.S. and Canada. Although, Lyft probably had little choice since Uber’s brand has remained strong. It is essentially synonymous for ride-hailing.
While Lyft has expanded into other areas, like Bikes and self-driving cars, the company has remained mostly focused on its core business. There has also been an emphasis on partnerships, such as with General Motors (NYSE:GM), which is an investor, Tata Motors and Ford (NYSE:F).
As of now, the company is continuing to grow at a torrid pace, which has many prospective investors excited about the Lyft IPO. During Q3, revenues spiked by 88% to $563 million, with the loss at $254 million. The company has also raised about $5 billion.
Focus on the Uber IPO or the Lyft IPO?
Handicapping these IPOs is nearly impossible. To get a gauge on the two companies, we really need the S-1s.
Besides, the turmoil in the markets could be a factor. If the volatility continues, there might be muted valuations on the deals. In fact, if both companies go public at the same time, this could mean there are fewer investor dollars to go around. But regardless, the Uber and Lyft IPOs are ready to go and they will clearly be ones for the history books.
Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
