Prospective investors interested in Lyft have had significant news break today as the company released its first financials on Friday. The second largest ride-hailing company in the U.S. official filed its Initial Public Offering (IPO) registration today, releasing its S-1 and kicking off the final leg of the pre-IPO process. If all goes as well as analysts expect, the company will list on the Nasdaq under the ticker symbol LYFT sometime in April.
Lyft’s financial details revealed some interesting figures for investors to ponder. For one, the company’s revenue is exploding, boasting $2.2 billion in revenues for the 2018 year. This is double the 2017 revenue figures, which were reported at $1.1 billion. However, the company is also seeing its operating losses grow.
Like many other IPO candidates, the San Francisco-based business lost almost a billion throughout 2018, a 32 percent increase from 2017 despite the fact that revenues have doubled. Lyft is currently working with JPMorgan, Credit Suisse, and Jefferies as the leading investment banks for the IPO.
According to Bloomberg, Lyft has warned that its expenses are likely to increase in the future, adding that it might not be able to “achieve or maintain profitability in the future.” While conventional investors might be worried over this lack of profitability, many investors in the tech industry are used to working with start-ups who have yet to turn a profit as they opt to pursue an aggressive growth strategy instead.
“Significant revenue growth is everything in an IPO,” added Barrett Daniels, head of IPOs at consultancy Deloitte LLP. “People often like to talk about losses, but they really don’t matter nearly as much.”
Lyft filed an initial offering size of $100 million, a placeholder amount as the company plans for a total market valuation of between $20 billion to $25 billion. This would make Lyft one of the largest tech IPO’s in many years.
Comparisons to Lyft’s largest rival Uber are inevitable, which has seen a similar lack of profitability over the years. Uber, which is expected to go public later in 2019 as well, has lost over $10 billion in since it was founded, despite its revenues exceeding $11.5 billion. Lyft, in contrast to Uber, has recently disclosed details on a new compensation plan for their contract-based drivers. According to The Wall Street Journal, the company would give $1,000 to drivers who have over 10,000 rides on the platform, along with a further bonus up to $10,000 for drivers who’ve completed 20,000 rides.
The Lyft IPO promises to kick start what could be a remarkable year for tech IPO’s, as well as the investors and traders who see the opportunities these offerings represent.
Lyft Company Profile
Lyft, Inc., offers ridesharing and peer-to-peer transportation services via an application. The company matches drivers with passengers who request rides. It allows payment through the application. Additionally, the user can schedule rides up to seven days in advance. It focuses on college, university, and corporate communities. Lyft, Inc. has a strategic partnership with Cubigo. The company was formerly known as Zimride, Inc. and changed its name to Lyft, Inc. in May 2013. Lyft, Inc. was incorporated in 2007 and is based in San Francisco, California. – Bloomberg
