Winning the Race to IPO: 5 Reasons Why it Matters for Lyft

Lyft is finally winning in a race against Uber. Lyft will be the first ride-sharing company to go public if things go as planned over the next six weeks.

Recent media reports suggested that Lyft will make its IPO filing public by the end of February 2019 and launch its IPO roadshow by the end of March 2019. Effectively, the company could start trading on NASDAQ by early April 2019.

Over the past year, Lyft has gained market share against Uber, according to published reports. In fact, Lyft raised roughly $2.9 billion in the past couple of years – a strong tailwind heading into the IPO.

But, as it is poised to jump into the public markets, one key question arises: Is it a good idea for Lyft to beat Uber to an IPO?

While Lyft’s first-mover advantage as the only public ride-sharing company could be short-lived, we believe that these are the five reasons why it is a good idea for Lyft to go public before Uber.

1. Lyft can set the stage for disclosures and metrics: In its S-1 filing, Lyft would likely disclose underlying growth metrics such as the number of drivers, number of rides, and number of riders.

In addition, the company could provide a revenue breakdown by geography as well as revenue breakdown by product. As the first ride-sharing company going public, Lyft has the flexibility to choose which metrics convey its story in the manner the management wishes to communicate.

2. Lyft has more to gain from IPO-related press coverage: Lyft has been traditionally viewed as a fast follower to Uber and has lagged in brand awareness globally. But, an IPO is a critical moment for marketing, and clearly Lyft has a lot of ground to gain here. We estimate the value of earned media from Lyft’s IPO coverage in the media could be worth millions of dollars.

3. Lyft will attract more institutional investor interest: As the first ride-sharing company to go public, Lyft stands to benefit from a rare first-mover advantage in its category as public-equity investors eagerly look forward to getting the first bite of the ride-sharing apple.

With an estimated $300 billion worth of ride-sharing IPOs expected over the next couple of years, we don’t think there would be any shortage in investor interest and appetite for Lyft shares.

4. Lyft roadshow conversations would have fewer distractions: Investors love to juxtapose financials of companies within a sector. Such comparisons can yield interesting conclusions around comparable things such as customer acquisition economics and R&D spend trends.

Unless Uber fast-tracks its IPO filing process, investors would likely have to dissect Lyft’s IPO filing on a stand-alone basis, leading to fewer distractions during Lyft roadshow conversations.  

5. Lyft vs. Uber IPO race brings back LinkedIn vs. Facebook IPO déjà vu: As a quick recap, LinkedIn went public in May 2011. LinkedIn shares were priced at $45 and closed at $94, implying more than 100 percent first-day pop.

Conversely, Facebook went public in May 2012, priced its shares $38 and traded largely flat during its first day of trading. At the time, Facebook’s market cap was roughly 10 times that of Linkedin.

All in, there are several parallels between Lyft and Uber IPOs, and, we wouldn’t be surprised if the initial reception turns out to be similar, too.

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