By
Temitope Olatunji
March 11th, 2024
Lyft is set to launch its investor road show for the upcoming IPO today. The event, scheduled to take place this month, will mark the first time a ride-hailing company has debuted on the U.S. public markets.
Earlier, initial coin offerings (ICOs) were regarded as an effective way to raise money. However, the practice has shown that many scammers took advantage of ICOs, as a result, many fraudulent actions were taken, and investors lost their money. High frequency of ICO fraud cases has prompted different governments to bring crypto criminals to justice and introduce strict regulations regarding ICOs.
These measures led to the necessity of looking for new ways to raise funds, and that’s how IPOs appeared. An initial public offering is an evolutionary form of ICOs, but it is well-defined and understood by governments.
The latest announcement concerning IPOs has been made by the ride-hailing company Lyft. Today, Lyft is to launch an investor roadshow for its IPO, seeking to raise as much as $2 billion. According to people familiar with the matter, Lyft is also aiming for a market valuation of $21 billion to $23 billion (in June, Lyft was valued at $15.1 billion with a $600 million financing).
The company itself declined to comment on the matter, however, some details of the upcoming IPO have been revealed. In December last year, Lyft filed paperwork for an initial public offering where it stated that before pricing the IPO and listing on the Nasdaq, the company would meet with investors across the United States.
Lyft will try to convince investors to participate in its IPO, emphasizing its rapid growth in the US and a relatively simple business model which focuses on selling rides in cars, bikes, and scooters.
In the IPO filing, Lyft stated that since the beginning of 2018, its U.S. market share had risen from 35 to 39 percent. Lyft’s revenue was $2.16 billion in 2018, which is twice more than the previous year and up 528 percent from $343 million in 2016. But Lyft’s losses also increased. The company lost $911 million in 2018, which climbed from $688 million in 2017.
Launched in 2012 and is led by its founders, Logan Green and John Zimmer, Lyft will trade under the ticker symbol “LYFT.” JPMorgan Chase & Co., Credit Suisse Group AG, and Jefferies Financial Group Inc. are leading the IPO.
Lyft’s IPO will mark the first time a ride-hailing company has debuted on the U.S. public markets.
Tough Competition in the Ride-Hailing Industry
Lyft canalizes all its energies to prove that it is better than its major competitor Uber which filed an IPO paperwork a couple of hours after Lyft. Unlike Lyft, Uber operates not only in North America. Uber’s revenue made up $11.3 billion last year, with earnings from rides accounting for $50 billion. As for losses, Uber gave off $3.3 billion. According to its IPO filing, Uber is seeking a valuation as high as $120 billion at the IPO expected to commence in April.
In 2017, the ride-hailing industry touted $36.5 billion in global sales. In the coming years, it is expected to grow rapidly. The questions that still remain unclear include the future of automated driving, regulatory pushback and legal challenges over drivers’ pay.
While Lyft and Uber were getting IPO feedback from the SEC and competing for the title of the best ride-hailing company, the industry saw the entrance of one more autonomous technology startup on the arena.
In February, Nuro, which largely operates in the San Francisco Bay Area, said it raised $940 million from SoftBank Group Corp. As a result, the Silicon Valley-based company was valued at $2.7 billion. Nuro is planning to use the funds to expand its delivery service to new areas, add new partners, expand its fleet and grow its team.