It’s been a rough ride for Lyft with the approach of Uber’s initial public offering (IPO), and that dim trend continued on Monday (April 15). After a 20 percent stock price decline last week, that price hit a 52-week low on Monday – a drop that reportedly sucked $1 billion from Lyft’s market cap.
By 1:55 p.m. (EST) on Monday, Lyft’s stock price stood at $56.44. When Lyft launched its IPO, its stock cost $72 per share on March 29. Since then, Uber released its IPO prospectus, and investors apparently soured on that company’s ridesharing rival.
The reasons are not immediately clear, though, as PYMNTS has reported: There is confusion about how to measure and compare the two ridesharing pioneers, each of which use differing metrics for certain important financials, including gross bookings.
Even so, the reasons are not impossible to discern. According to a new PYMNTS column from Karen Webster, pundits have attributed the drop to overzealous investors who may have since sobered up, perhaps even more quickly after having gotten a good look at the financial performance of the global ridesharing goliath that defined the space. That look has many of those same pundits now fretting over how to value both adequately, since apple-to-apple comparisons, they say, are hard.
That said, there remains optimism about Lyft’s future and rebound in its stock price, at least when attention starts shifting away from Uber’s IPO. As Wedbush Securities said in a note released Friday (April 12), “We believe there could be continued pressure on Lyft shares while investors wait for Uber’s roadshow and dig further into the full financial metrics. In our opinion, the battle for market share will be balanced going forward.”
For the full year 2018, Uber had gross bookings of more than $50 billion, a 45 percent increase from 2017. Lyft, in 2018, had gross bookings of more than $8 billion – certainly much less than Uber took in, but also a 76 percent increase from the previous year, outpacing Uber’s growth. That said, Lyft does not include tolls and surcharges, and has much less of a global presence than does its rideshare rival. Uber has a valuation of $100 billion at this point, while Lyft’s is not even 20 percent of that – and today’s stock market news certainly will not help that.
The recent Uber IPO activity, along with the ongoing decline of Lyft’s stock price, underscore not only the unmerciful tendencies of the stock market when it comes to big technology offerings, but also the massive differences between those ridesharing pioneers, which were discussed in the new PYMNTS column by Karen Webster.
Take the central difference: For Uber, transportation is a platform feature that is central to its business, but not its end game. One need only look at Uber Eats for confirmation of that, but it goes further. Uber is working its way deeper into payments via Uber Cash, for instance, while also eying new partnerships that involve food, car rentals, freight and other areas. In a letter that came with the Uber IPO prospectus, CEO Dara Khosrowshahi wrote that Uber is “still barely scratching the surface when it comes to huge industries like food and logistics.”
Not only that, but Uber has done more than most – if not all – big technology companies to change the way consumers think about payments, and the expectations those consumers have about payments. We can thank Uber’s frictionless, seamless, mobile payment process for that.
By contrast, Lyft’s marketplace of drivers and transportation alternatives gives consumers access to a variety of cost-effective transportation options, so they don’t have to buy cars or drive them as much. Indeed, John Zimmer, Lyft’s co-founder, said during the company’s IPO roadshow that Lyft is “solely focused on consumer transportation.” Simply put, Lyft is more interested in providing consumers with an alternative to owning cars than doing anything else. It seems to have no big Uber-like ambitions.
The Uber IPO push is an ongoing effort, and it’s not unreasonable to believe that Lyft faces more turbulence before things settle down.