Weekly Brief: Lyft Files for Massive IPO, Steals Spotlight From Geneva

Weekly Brief: Lyft Files for Massive IPO, Steals Spotlight From Geneva

The Geneva Motor Show that starts this Thursday, March 7, is famous for turning heads with concept cars, prototypes and street-ready vehicles for the European market. This year’s show is expected to spotlight the future of electric vehicles, from a luxury electric hypercar called the Battista from Pininfarina to an electric all-terrain concept from Aston Martin. There will also be new super cars from Lamborghini and Ferrari. Our intrepid Paul Myles is on hand for the show and is already dropping updates from the field, including news about Audi’s EV-only stand in Geneva.

However, the week-long build-up to the Geneva Motor Show this year feels like the perfect parable for today’s auto industry, as another marquee show about new metal has been scooped by a tech company selling mobility. Forget electric versus diesel powertrain, two-seater versus four, the real conversation these days is about entirely new ways to get from point A to point B and whether traditional car ownership, or even drivers, are needed to make that happen. So while the car industry was getting hyped about Geneva last week, it was only fitting that Lyft filed for its initial public offering back in the US, immediately drawing attention to the west side of the pond.

Lyft’s IPO is a big deal for several reasons. First, it will make Lyft the first publicly traded ride-hailing company in the world, ahead of Uber, which is also planning to go public in 2019 but has been set back by a number of recent scandals and missteps. Beating Uber to the punch is important to Lyft because Uber is eight times its size, with an estimated value somewhere between $70BN and $120BN. Much of that perceived value comes from Uber’s international operations, where Lyft has barely any presence at all. If it wants to get bigger, it needs to go abroad, and if it wants to go abroad, it needs capital. Lots and lots of it.

The IPO should help. Investors never know exactly what they’re getting when a unicorn like Lyft or Uber comes along. If they had a couple months of performance from Uber to judge Lyft by, they might not be as willing to open up their purses. That’s why going public first should help Lyft.

From an external perspective, Lyft’s IPO is important because it gives people like us some fascinating insight into how its business operates — insights to this point that the company has never publicly divulged. Those insights point to reasons for optimism and reasons for risk.

Starting with the good, Lyft has turned in some eye-popping numbers over the past two years. The company reported that its ridership has nearly tripled in the last two years, up to 18.6 million from 6.6 million in late 2016. Its number of total rides more than tripled, from roughly 50 million to nearly 180 million over the same time period. Those numbers translate to almost 50% growth year-on-year in a market that’s seven years old at this point.

As for the bad? Lyft is hemorrhaging money — more than $3BN in 2018, which was up almost threefold from the roughly $1BN it spent in 2016. If its revenue could keep up, that wouldn’t be a problem. Unfortunately, its losses are getting bigger and nearly totaled $1BN in 2018.

Lyft likes to say that it’s got the momentum. Its public image in the US is stronger than Uber’s, it’s been cherry picking Uber riders ever since 2016. Will the IPO continue this momentum abroad?

And will it ultimately impact Uber’s IPO in the next few months? One would think there’s enough space in the market for both a successful Uber and a successful Lyft that keep their respective shareholders happy. Fasten your seat belts, we’re about to find out.

 


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