Uber And Lyft Race To Get Ahead In IPO Game

The world being created by ridesharing services is one of aggressive corporate expansion, political action, payments development, socio-economic uncertainty and gig economy growth. Now comes the real fun, theater and drama.

Anyone interested in payments and commerce already knows that the two main rivals in that space, Uber and Lyft, were headed toward an initial public offering (IPO). Fresh information has now painted a more detailed picture of those expected moves.

Recent Wall Street proposals value Uber at up to $120 billion in an IPO, widely expected to take place in early 2019, according to The Wall Street Journal (WSJ). That report noted such a figure is twice as high as Uber’s “valuation in a fundraising round two months ago,” and more than the combined value of General Motors, Ford and Fiat Chrysler. Such optimism comes as Uber, under new CEO Dara Khosrowshahi, polishes a brand and company reputation that was tarnished by workplace sexual harassment claims and accusations of stolen trade secrets from Google’s parent company.

As for Lyft, it has reportedly given JPMorgan Chase the job of leading the ridesharing provider’s IPO, according to CNBC. “JPMorgan will not be a part of Uber’s IPO after selecting to lead Lyft’s offering,” an unnamed source told the publication. It quoted a source who said that Lyft’s value “could” be more than $15 billion. The Lyft IPO would also supposedly happen in early 2019, though it would happen before Uber’s, reports said.

Ridesharing Revenue

Lyft lost $254 million in the third quarter of 2018, compared to $195 million in the same period from a year earlier, according to WSJ. Q3 revenue, meanwhile, increased about 88 percent year over year to $563 million. Uber has yet to report Q3 financials, but the company’s Q2 revenue increased 63 percent from the prior year to $2.8 billion. Uber narrowed its loss to $891 million in the second quarter from $1.1 billion a year ago.

Nothing, of course, guarantees those big numbers will translate into reality.

As PYMNTS recently noted, as far as new issues on the public markets go, it may not matter that the red ink is building up. A recent report found that 83 percent of IPOs through 2018 to date have been with firms that lost money through the year that predated their IPOs. That percentage marks the highest tally in 38 years. The previous peak was 2000, which showed 81 percent of firms that came to market that year had lost money.

More Players

An important factor in the anticipated ridesharing IPOs is the increasing competition in the expanding space, according to several observers and reports.

Earlier this month, for instance, Waze Carpool, the Google-owned app that connects people with rides, said the service was now available nationwide. Waze Carpool said it has 110 million monthly active users (MAUs) globally. Users of Waze can join Waze Carpool as a driver, rider or both.

Drivers can drive up to four people or leave their car at home. Employees and employers can get other workers to participate in carpools and team up with Waze Carpool to get a month of free rides for everyone at the company. Waze said the app will also be available at 50 Amazon fulfillment centers. The company is also crafting deals with cities, businesses, transit agencies and civic organizations.

Just outside the Uber and Lyft ridesharing ecosystem, other companies are experimenting with providing more automotive options beyond traditional ownership, rentals or leasing. As detailed in a recently PYMNTS research report on subscription commerce, some major automakers are using the subscription model to get consumers behind the wheel, granting them access, mileage, insurance and other costs for a monthly fee. That includes all types of vehicles, both luxury and not-so-glamorous. Canvas, Ford’s vehicle subscription service, offers subscribers access to a selection of used Ford vehicles, for example.

“The two main ways to get into a vehicle today are short-term options, like ridesharing or renting by the day or hour, and long-term commitments, like leases and loans,” Canvas CEO Ned Ryan told PYMNTS. “There isn’t anything in between. We wanted to create a simple and easy way to get into a vehicle somewhere in between those two worlds.”

The impact, if any, that this might have on the anticipated Uber and Lyft IPOs is unclear. However, all these developments just add more energy to this new automotive world as two ridesharing giants prepare to go public.