Late in 2018, the two largest ride-sharing companies in the United States, Uber and Lyft, each submitted confidential filings with the Securities and Exchange Commission (SEC) in preparation for an initial public offering (IPO). Both listings are hotly anticipated, and it appears that Lyft has taken the lead in the race to reach the market first.
Multiple reports suggest that Lyft is planning to debut on the Nasdaq and could begin trading by late March or early April. That timetable means investors could get their first peek at Lyft's financial results as early as next week.
While the race may seem like a game, there are potential advantages for Lyft if it can beat Uber to the punch.
Stepping out from a larger rival's shadow
Ride-hailing and ride-sharing have become wildly popular with consumers over the past couple of years, and Uber and Lyft have stoked interest from investors who are eager to get in on the ground floor. The first company to launch will provide the public -- and larger institutional investors -- with a key opportunity to invest in the nascent industry. Lyft will be striking when interest is potentially at its peak, which could help to maximize the capital it raises by selling shares.
Lyft is the smaller of the two, but being first could give it a chance to step out of Uber's shadow. Lyft was valued at about $15 billion during its most recent funding round, and its IPO could fetch between $20 billion and $25 billion, according to The New York Times. To put that into perspective, Uber was last valued at $76 billion and is expected to raise about $120 billion from its public offering. Uber's higher valuation is the result of a much larger footprint that includes substantial international operations, while Lyft's services are confined to North America. The gulf between the two competitors is also illustrated by their ridership numbers. In 2018, Lyft provided about 375 million rides -- a far cry from Uber's 4 billion.
Both companies are generating huge losses as they battle for market share in the U.S. Lyft reportedly lost about $254 million last quarter, and Uber's losses soared to more than $1 billion.
An unexpected delay
It's been apparent for some time that the ride-hailing rivals have been competing for more than customers. Uber submitted its confidential IPO filing mere hours after Lyft announced its own filing. The nearly simultaneous submissions signaled that the race was on, and suggested just how strongly each company wants to be the first to debut on the public markets.
The race took an unexpected pause when the recent U.S. government shutdown slowed or halted operations at many federal agencies, including the SEC, which is responsible for handling IPOs. The shutdown left companies at a standstill, awaiting the reopening of the government. With government employees back at work, companies seeking IPOs are moving quickly to institute those plans and make up for lost time.
Coming down to the wire
Investors have eagerly awaited the ride-sharing companies' public listings, and as the smaller of the two companies, Lyft has a prime opportunity to make a splash by being first. If the company is moving at the aggressive pace reports indicate, investors will soon get a chance to plunk down their money in this red-hot growth industry.