Last Friday, ridesharing startup Lyft filed an S-1 Registration Statement with the U.S. Securities and Exchange Commission for an initial public offering, beating rival Uber to the punch. Lyft hopes to be valued between $20 billion and $25 billion. In its prospectus, Lyft reported that it had doubled revenue between 2017 and 2018 from $1.1 billion to $2.2 billion. In spite of that growth, Lyft also reported a $911.3 million loss. The IPO is being underwritten by J. P. Morgan, Credit Suisse and Jefferies.
In the prospectus, Lyft said its mission is to improve people’s lives with the world’s best transportation.
“In 2012, we launched our peer-to-peer marketplace for on-demand ridesharing and have continued to pioneer innovations aligned with our mission. Today, Lyft is one of the largest and fastest-growing multimodal transportation networks in the United States and Canada,” said Lyft in the prospectus. “We believe that cities should be built for people not cars.”
In addition to the burden of car ownership, Lyft said that U.S. consumers spend more money on transportation than on any other expense except for housing. In fact, in the U.S., the Bureau of Labor Statistics, U.S. consumers spend more than $1.2 trillion a year on personal transportation – an average of $9,500 per household. Lyft also said that the average car is parked 95 percent of the time and only in use 5 percent.
“We believe that the world is at the beginning of a shift away from car ownership to Transportation-as-a-Service, or TaaS,” said the company. “Lyft is at the forefront of this massive societal change…as the evolution continues, we believe there is massive opportunity for us to improve the lives of our riders by connecting them to more affordable and convenient transportation options.”
Lyft, who offers an all-access subscription plan for frequent users, included some interesting facts in its filing with the SEC. Lyft:
- Had $8.1 billion in bookings in 2018
- Had $2.2 billion in revenue in 2018
- Had 1 billion+ cumulative rides
- Is available in over 300 markets in the U.S. and Canada
- Drove 30.7 million riders from one place to another
- Paid 1.9 million drivers last year
- Paid $10 billion to drivers since the company’s inception
- Also offers shared bikes and scooters for first-mile and last-mile legs of multimodal trips
Lyft plans to continue to gain market share by growing its rider base, increase its use cases, expand multimodal offerings, grow rider spending, invest in technology, increase efficiency and pursue strategic partnerships and possible merger and acquisition opportunities. The downside, of course, is competitors like Uber, who is expected to be valued as high as $120 billion through its IPO, as well as new entrants to the market. (Uber reported revenue of $3.02 billion in the fourth quarter of 2018, according to Crunchbase News.)
Should investors be concerned that Lyft is unprofitable? Recode says no, that this is common among tech startups when filing their IPOs. In fact, they say that, in 2018, 84 percent of tech companies that went public were also unprofitable.
Lyft has had a great run over the last few years in terms of revenue and ridership growth. However, their losses are growing too, and with Uber expected to file its IPO this year, the two companies could be competing for the same investors. So far, Lyft has beaten Uber to the punch, and it will get first crack at investors curious about the ridesharing economy and TaaS. We anticipate Uber will follow closely behind, perhaps even advancing their timeline.