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Uber and Lyft IPOs Are At Risk! A Minimum Wage Is Now In Place, Spreading Around The US

While Lyft is planning on having their IPO issued in 2019, and start live trading on Nasdaq already by the beginning of April, Uber representatives still remain quiet on the matter of the exact date of the issuance of Uber Initial Public Offering.

What is known by far is that both companies filed their confidential IPO filings to the Securities and Exchange Commission back at the end of 2018, having Uber representatives stating that their IPO preparations are set to last for at least several more weeks.

By the time Uber’s IPO would be ready for release, Lyft should have already started to live trade on Nasdaq exchange in accordance with the plan.

However, even though Lyft may acquire a starting advantage as far as their IPO sale concerned, analysts are predicting that the IPO won’t score more than 15 billion, in oppose to the predicted 120 billion dollars for Uber at their upcoming initial IPO sale.

In addition, Uber is available in 70 countries around the globe, while Lyft is only available in the US and Canada with no clear plans on whether the company would be gong for an expansion in the upcoming period.

Uber also has a larger market capitalization in oppose to its competitors, such as Lyft, which means that Uber’s IPO may go bullish despite the fact that Uber has been losing money in the last fiscal year.

Wait and see before you invest!

Your best opportunity to invest may be later. According to CNBC, while these companies have found their window to go public, your best opportunity to invest may be later. New offerings come with high risks and few guarantees. The longer you wait, the more likely you are to get a fair price, experts say.

For multiple companies, it’s the moment they’ve been waiting for: The window has opened for them to go public. You’ve probably heard the names, including Levi Strauss, which made its public market debut this week. Ride-sharing businesses Lyft and Uber, among other companies, are also teed up to go public in the coming months.

But if you’re thinking you want to invest in these stocks, experts generally have one word of advice: Wait. “IPOs aren’t just about, ‘Oh, I want to invest in the things I know,’” said Kathleen Smith, principal and manager of IPO ETFs at Renaissance Capital. “It’s about, ’How do I make money investing in these?″ “It doesn’t do any good to own something when you’re losing money in it.”

In today’s market, chances are that buying in on a newly public stock could be a losing proposition. Financial experts say there are several reasons why. You could already be at a disadvantage. Even though the stock is not yet public, you could already be behind. Just accessing IPO shares is difficult, Smith noted, because most shares will be allocated to big institutional clients of Wall Street firms.

Uber Lyft IPOs At Risk

Uber and Lyft IPO Valuations at Risk After Drivers’ Wage Backlash. Uber and Lyft might be getting ready for a couple of prime-time IPOs, but that doesn’t mean its all smooth sailing for the ride-sharing unicorns. Recent scrutiny on the amount that they pay their drivers is threatening to overshadow the public-listing amid a backlash from drivers who are looking to unionize.

A minimum wage is now in place in New York

A minimum wage is now in place in New York, ($17 after expenses for Uber and Lyft drivers), and it appears this momentum is now catching on around the US. The main fears are that both companies will slash driver pay to try and pad their bottom line for the media blitz ahead of their IPOs.

We hear contrasting things about driving Uber in particular. There are stories like this, showing a driver using the platform to make bank executive money but more and more about how pay is being slashed. It appears the recent changes made to the driver bonus structure is making life tough.

Drivers are organizing against Uber and Lyft

In Los Angles, unionization seems inevitable, and The Guardian quote Nicole Moore who has driven for both Uber and Lyft, confirming ride-share driver fears about the IPO,

“Uber is getting ready for their IPO, they want to look really good for their investors, and are creating situations where people may be put on the street homeless because they can’t pay their rent… That’s why we’re organizing.”

o liver there. They cannot afford to risk losing support there, but at the same time corporations have increasingly found themselves pressured by social justice initiatives, and they cannot slip up at a time when PR is crucial.

Some drivers are concerned Uber should be able to afford to pay them more as they are a billion-dollar company. Well, their valuation is markets are high, and people like the concept, not because they make money. They are a massive loser of money, piling up a lot of debt. Lyft is no different. Higher driver costs seem inevitable. They are already struggling in the red, and an increase in pay would only intensify this issue.

Taxi drivers have established strong unions and are an established business sector. If you choose to drive for a disruptive business, there are going to be growing pains. When your car exists mainly for taxi-ing other people around, you are just a taxi that uses an app. Like taxi-drivers, there are high costs and a thin profit margin which during quiet periods means you make no money. If you started driving Uber a while ago, it makes sense you would see pay fall as more drivers are now on the roads. Lyft entering the fray is only exaggerating this issue. Obviously rider demand for cars is also a key metric, and this could fall as costs rise.

Ride-share drivers can unionize all they like, but if that results in costs for riders hitting traditional taxi prices, they could create an opportunity for old fashioned services to make a comeback with a minimal amount of investment in better technology. This would further increase competition on the road and hurt Uber and Lyft’s profitability even more.

Think of Facebook: Investors suffered losses

You might not be able to stomach the ups and downs. While many IPOs close up on their first day, that first day pop and subsequent run up is not guaranteed, according to Michael McKevitt, director of financial planning at Guillaume & Freckman. Think back to Facebook’s IPO in May 2012. The company went to market at a high price and investors suffered losses at the outset.

Be ready for multiple 50 percent declines

It took about a year for Facebook’s stock to get back to its opening price. Today, the stock’s performance would be considered a success — as long as you held on. “Even if you pick the right company, like Facebook, which has done amazingly well, you still had to put up with a 50 percent decline, multiple 40 percent declines, multiple 20 percent declines,” McKevitt said. “How many people bought it and held onto it through all of these moves?”

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.
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