Lyft IPO Valuation: $23 billion valuation, 30.77 million shares, $68 per share

Uber and Lyft, ride-sharing companies which represent direct competitors in the industry of getting a quick and cheap ride anywhere in the world where Lyft and Uber applications are supported, have submitted their IPO filings to the Securities and Exchange Commission at the end of 2018 around the same time.

According to CNBC, Lyft’s IPO is already oversubscribed. It has set an indicative IPO price range of $62 to $68 per share and is set to price the IPO.

Lyft Kicks Off IPO Roadshow by Setting Valuation at Up to $23 Billion
The ride-hailing company’s stock could initially trade for as much as $68 per share.
Lyft officially began its investor roadshow Monday, pitching itself to underwriting investment banks and disclosing in its latest SEC filing that the company wants to sell 30.77 million shares under the ticker symbol “LYFT” at between $62 and $68 per share. Lyft is hoping to raise up to $2 billion from the IPO.

Lyft IPO Valuation:

That plan would give Lyft a valuation of between $21 billion to $23 billion. While this is an official share price range from Lyft, the final price could still change between now and the company’s initial public offering, which is planned for the end of March. A final price range is expected on March 28. Lyft’s shares will be listed on the Nasdaq exchange.

Lyft’s $21 billion to $23 billion valuation projection is close to the range that Reuters had reported earlier this month, and it would represent one of the largest tech IPOs since Snap’s $24 billion listing in March 2017. As a side note: Snap shares haven’t been doing so well since it went public.

This latest news of Lyft’s share price listing and valuation is significant to investors looking to buy shares of the company, but it’s also relevant to investors keeping a close eye on Uber and its forthcoming IPO.

Lyft investment data worth remembering
Lyft filed its official S-1 form — to register the company’s with the Securities and Exchange Commission (SEC) — earlier this month. In it, the company shed a lot of light on its business.

For instance, Lyft said it had sales of $2.1 billion last year, with a net loss of $911.3 million. Lyft’s bookings — the dollar amount it receives minus reductions for drivers’ expenses — jumped 76% in 2018 to $8.1 billion. The ride-hailing company had a total of 18.6 million active riders in the fourth quarter of 2018, with revenue per active rider reaching $36.04 in the quarter, up from $27.34 in the year-ago quarter.

Lyft’s growth strategy (as outlined in the company’s S-1 filing) will be to invest money from its IPO to grow its rider base, expand its its mulitmodal offerings (cars, bikes, scooters, etc.), and build out its autonomous vehicle pursuits. The company has about 39% of the U.S. ride-hailing market right now, and it’ll need to spend more money to maintain, and hopefully grow, that position.

For example, the company’s research and development costs more than doubled from 2017 to 2018, reaching $300 million last year. To stay competitive with Uber, Lyft needs to make sure it has enough cash on hand to help develop autonomous vehicle services — and selling its shares is a great way for the company to raise capital quickly.

What does Lyft’s IPO mean for Uber?
Lyft may be an enticing IPO for some investors considering that the company will be one of the only ride-hailing pure-plays to invest in at the moment. But investors are also looking to Lyft to help gauge how big Uber’s IPO could be.

Uber is a much bigger company than Lyft, and its IPO planned for April is even more anticipated. Uber’s revenue in 2018 was $11.3 billion, the company operates in 60 countries (compared to just the U.S. and Canada for Lyft), and it bills itself as a transportation solutions company that is exploring big bets like Uber Eats, Uber Freight, and autonomous vehicles.

Uber’s valuation at IPO is currently estimated at staggering $120 billion.

How Much Will Lyft IPO Cost? What Will Lyft IPO Price Will Be? How To Invest In Lyft IPO?

According to CNBC, Lyft’s IPO is already oversubscribed. It has set an indicative IPO price range of $62 to $68 per share and is set to price the IPO.

Lyft’s initial public offering (IPO) is oversubscribed based on commitments made so far by investors, making it more likely that the ride-hailing startup will fetch or even exceed the $23 billion valuation it is seeking, people familiar with the matter said on Tuesday.

The development indicates that many investors are willing to overcome uncertainty over Lyft’s path to profitability and its strategy for autonomous driving, for fear of missing out on the biggest and most high-profile technology IPO since Snap Inc in 2017.

Lyft started its IPO road show on Monday and has spent the last two days meeting with investors in New York, the sources said. It has set an indicative IPO price range of $62 to $68 per share and is set to price the IPO on March 28.

The exact level of oversubscription could not be learned. The sources cautioned that the IPO price is still uncertain and they asked not to be identified because the matter is confidential.

How to Invest in Lyft before It Goes Public

According to Investopedia, There are a number of ways for average investors to directly or indirectly bet on Uber’s performance. This article explores ways that investors can profit from Uber’s growing global dominance in the ride-sharing market.

The Indirect Approach
One indirect method is to invest in a publicly traded company that owns a sizeable share of Uber private stock. Some major Uber investors include Alphabet Inc. (GOOG), Microsoft Corp. (MSFT), Softbank (which can be bought OTC, the ticker is SFTBY), or private equity giant BlackRock Inc. (BLK). Given that Uber’s post IPO shares would become part of these investing company’s balance sheets, their stocks can realize strong gains when Uber’s private stock goes up.

For example, Yahoo Inc. (which is now Altaba Inc.: AABA) was a very large investor in Chinese e-commerce giant Alibaba Group Holding Ltd. (BABA). Prior to Alibaba’s IPO in 2014, Yahoo! saw strong gains thanks to its Alibaba holdings. When Alibaba stock rose and fell during a trading session, Yahoo stock regularly followed.

The Competitive Approach
You can also effectively wager on your expectations for Uber’s and Lyft’s future by speculating on a competitor’s stock. While the companies’ rises may seem unstoppable, both are in fact facing many competitive, legal and regulatory challenges. Competitors in the transportation industry are not going to go down without a fight. No group of rivals has been more outspoken and willing to use lobbyist influence than the taxi industry.

Uber’s largest legal threat is probably coming from the approximately 160,000 drivers working for them. Uber classifies these drivers as independent contractors and not employees. This allows the company to avoid responsibility for any Social Security or Medicare payments, healthcare costs, or workers compensation claims. But these drivers are initiating lawsuits claiming that they are employees who should receive benefits and protections. A number of current cases in California could lead to an avalanche of lawsuits across the country. And in April 2018, a ruling by the California Supreme Court made it “much more difficult for companies like Uber…to classify workers as independent contractors rather than employees.”

For these reasons, anyone with a bearish view on Uber can profit by investing in a company whose stock would surge if Uber fails in a sea of legal and regulatory challenges. That company is Medallion Financial Corp (MFIN), a specialty finance company that writes and services loans for taxicab medallions in major U.S. markets like New York City. Medallion’s stock has plummeted over the last 52 weeks under the uncertainly of the future of the taxi industry in the age of ride sharing.

Investors with a bullish view on Uber can also invest in Medallion stock by either short selling the equity or by purchasing put options. (For more, read “Short Selling: What Is Short Selling?”)

The Accredited Investor Approach
Following successful seed and angel investments in 2009 and 2010, respectively, Uber raised capital through a Series A round of investments with venture capital and private equity giants. The company has now completed many rounds of funding and obtained an additional $8.9 billion in December 2017 secondary market funding. In 2015, the firm raised capital from private equity giants Baidu and Tata Opportunities Fund. To become a client of a private equity fund, which might invest in private, pre-IPO companies like Uber, you must become an accredited investor.

To qualify to be an accredited investor, you must have a have a net worth of at least $1 million, not including the value of your primary home. Another way to qualify is by earning income of at least $200,000 for two consecutive years. You may also qualify if your combined income with your spouse is at least $300,000 (for more read, “Breaking Down ‘Accredited Investor’”).

Accredited investors can give money to the private equity companies that invest in Uber. For a better understanding of the types of funds that have invested in Uber, read CrunchBase’s breakdown of the firm’s investor rounds.

The Bottom Line
The private equity funds and venture capital companies that invested in Uber are no doubt looking forward a big payday following the IPO. Average investors who want to bet on Uber and Lyft pre-IPO can invest in other ways—for example by purchasing or shorting the stock of rival companies.

  • Rides given
    178.4 million in 2018
  • Revenue
    2016: $343.3 million
    2017: $1.1 billion
    2018: $2.2 billion
  • Net Loss
    2016: $682.8 million
    2017: $688.3 million and
    2018: $911.3 million
  • Revenue per active rider 
    March 2016: $15.88
    December 2018: $36.04
  • Revenue as percent of bookings
    March 2016: 16.8%
    December 2018: 28.7%

LYFT IPO Date 2019: What Time is the Lyft IPO? LYFT Still Losing Money, Is There a Potential for the Future Growth and Profitability

It is a busy week among public IPOs in preparation as Lyft, Uber and Pinterest are getting ready to issue their Initial Public Offerings with Lyft preparing to joining the list of NASDAQ stocks already at the beginning of the next week according to some sources, even though the company originally announced the IPO release for mid-March 2019.

During the last quarter of 2018, Lyft had already submitted their IPO paperwork to the SEC, while the filing submitted to the Securities and Exchange Commission describes the expectation to list Lyft on Nasdaq exchange market.

Lyft to Launch Its IPO by mid-March: LYFT Hoping for a Listing on NASDAQ

Uber and Lyft, ride-sharing companies which represent direct competitors in the industry of getting a quick and cheap ride anywhere in the world where Lyft and Uber applications are supported, have submitted their IPO filings to the Securities and Exchange Commission at the end of 2018 around the same time.

However, Lyft is hoping to beat Uber in the game of IPOs and stock trading, scheduling the official release of LYFT IPO for mid-March.

According to some sources the company could issue its IPO already at the beginning of the last week of February, however, the official issuance date is set for March 18th, 2019.

Since Uber still has weeks of preparation before releasing third IPO, Lyft has a great shot at issuing Lyft IPO before Uber gets a chance to do so, which will help the company avoid being overshadowed by Uber that undoubtedly has more operational force in oppose to Lyft.

The operational force of Uber lies in the fact that Uber is made available in 70 countries, while Lyft is only available in Canada and the United States at the moment, however, both Uber and Lyft are losing money.

To fight against losing more money, Lyft is said to be preparing a report that would hopefully convince investors that Lyft won’t stay in the red zone for too long, while investors still holding interest in Lyft and Uber are focusing on the future potential of these companies.

Lyft Growth Potential Confirmed: Can Lyft Bring Profit in the Long Run?

Lyft gained a head start in oppose to its tech peers by becoming the first out of the “main suspects” to have officially issued their IPO, at the same time representing one of the tech companies with a status of “unicorns”.

Being a multi-billion-dollar worth company, Lyft had a chance to show to the public the great growth potential that this rideshare firm had showcased during the period of the last seven years since it was founded back in 2012.

Despite the fact that Lyft became the first of the unicorns to release the Initial Public Offering, previous performance is indicating that profits might be a weak side unlike the growth rate of the company.

Is Lyft’s Growth Rate Enough to Bring Profits to Investors?

Lyft showcased an amazing pace of growth during the course of the last year, as the tech company managed to double their profits when compared to the company’s balance sheet from 2017, scoring 2.2 billion dollars.

However, it has to be noted that Lyft also lost 600 million in cash balance during 2018 following operation costs, while the company’s data reports low prices per ride, with 3.56$ per one ride, which is below average.

In the meanwhile, Lyft might have an advantage in oppose to its main competitor, Uber, as the company has a strict focus on the ridesharing business, however, Lyft might not be able to make any significant profits that investors could benefit from in the course of the next 11 years.

This is the case, according to the statement provided by Lyft representatives, because the company may not be able “to generate taxable income” in the period during which the company could use NOLs.

NOLs for Lyft won’t come to the beginning of expiration process until 2021 for state NOLs and until 2030 on the federal level.

Investing in Startup IPOs: The Risk Prevails in 2019 – How to Avoid Becoming a Victim of a Potential IPO Bubble

It’s been more than a decade since the US market suffered from a negative impact of the bursting dot-com bubble, which took place back in 2008. Many investors, especially “small” investors and investment firms have lost their investments as the market sank deep below the positive market trends.

The prices were previously bloated at that point that it was impossible to expect any further rises in the market, which is how the value of the market soon went south, causing many losses and chaos in the markets along the way.

According to analysts, something similar is taking place during the previous year of 2018, also becoming a part of the current year, so many are expecting to see another bursting bubble, only this time, startup IPOs investments are said to be at stake.

Analysts Warn About the Red Flags Regarding Startup IPOs

Back during the dot-com bubble, many startups that had their IPOs issued were rising at an accelerated pace, however, most of these companies were ravaged by the price drops and value cuts that came in later on after the “big boom” of the dot-com sector.

Analysts are implying that there is a similar scenario to the story of startups, including unicorns such as Airbnb, Uber, Lyft, and Slack, which are all issuing or have already issued IPOs.

These companies are worth billions of dollars, so it might be hard to imagine a major crash taking its toll on the companies’ profits, however, similar companies to the those mentioned above are already showing red flags regarding the active IPO boom.

Tencent Music Entertainment group, for instance, is one of the first red flags appearing in the market as the startup went far below their IPO value of 13$ per single share, while Dropbox Inc IPO, issued back in March 2018, dropped by -50% since the initial offering.   

Lyft or Uber IPO? Reasons Why Lyft Might Beat Uber in the IPO Race

According to the term formed back in 2013 by a venture capitalist called Aileen Lee, unicorn is a startup company held privately and valued at 1 billion dollars and up. Based on the latest results regarding the IPO that came out on Friday, Lyft, an on-demand transportation company, is ranked as 1-billion-dollar unicorn.

Investors previously considered that investing in Uber’s upcoming IPO would make a more profitable and more reliable investment with significantly mitigated risks in oppose to its “smaller” competitor, Lyft, it now appears that there are more than several reasons why Lyft IPO may beat Uber initial offering in the long run.

Lyft IPO Brings a “Unicorn” Status to the Rideshare Startup

Lyft managed to double its profits in the course of 2018 and in oppose to the previous year 2017. While Lyft recorded 1 billion dollars in 2017, the company reported 2.2 billion dollars only a year later.

One of the many reasons why Lyft could be a better investment in oppose to its direct competitor, Uber, is the fact that Uber appears to be “bloated”.

Uber is also having regulatory issues, related to the fact that Uber is available in around 70 countries across the globe, while Lyft is focused on the US and Canada, having a narrowly determined targeted audience and having to deal with a leaner business model in oppose to Uber.

Since Lyft is focused on the US, the company has made sure that they are most commonly dealing with an environment which is business friendly in most cases.

Moreover, now that Lyft is a publicly traded company with its own IPO, the startup is getting more on its value, while Uber is yet to issue their IPO, that way allowing Lyft to take a head start.

In addition, Lyft also started to invest in self-driving cars, much like Uber Eats, following its competitor step-by-step in hope to surpass it with a similar but leaner business model.

Rideshare vs Car Rental Companies: Are Rideshare Companies Killing the Car Rental Industry?

While two rideshare companies are worth billions of dollars, Lyft have issued their IPO back at the beginning of March, while Uber is making final preparations for their own Initial Public Offering, which at the same time testifies on the growth potential of these tech companies.

However, it appears that car rental companies, on the other hand, are suffering on the cost of success of rideshare business according to the latest report from Epsilon-Conversant as more customers are switching from rentals to rideshares.

Car Rental Industry Losing Profits to Rideshare Unicorns

According to the latest report published by Epsilon-Conversant, a digital marketing company, rideshares are taking over the travel and transportation business. Based on the latest results, it appears that more than 50% of previous car rental customers have stopped using rental services, switching their focus to rideshares like Lyft and Uber.

That is how Uber and Lyft came to the status of tech unicorns in a relatively short span of time, causing loss of profit to car rental industry, while the digital marketing company s reporting that 63% of car rental customers have reduced the frequency of using car rentals, preferring rideshares.

In the period of the last two years that the report had covered, the travel and transportation business brought 140 billion dollars in transactions, of which car rentals have recorded a major loss of 3.2 billion dollars.

Lyft and Uber made up for 30% of the total amount in transactions, being a preferred transportation choice when compared to rentals in the last two years.

This might be the case because Lyft and Uber represent a cost-effective solution with an increasing demand in the last several years.

On the other hand, car rentals are still favored by older generations as much as millennials are mesmerized with Lyft or Uber services, which might provide the car rental industry with a specific demographic the business can rely on.

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.
Aamir Kapoor is a fintech writer specializing in cryptocurrency and blockchain. He has a background in finance and banking and was a researcher.