Published: Mon, March 04, 2019
Markets | By Erika Turner

Lyft losses grow ahead of $25bn flotation

Lyft losses grow ahead of $25bn flotation

Banks have sketched out valuation scenarios for Uber as a public company that stretch as high as US$120 billion, people familiar with the matter have said. So what did we learn about Lyft with today's filing?

Lyft posted revenue of $2.2 billion last year, up 103 percent year-over-year, and a net loss of $911 million, up 32 percent. Under the potential risk factors listed in its filing with the Securities and Exchanges Commission, Lyft warns that its expenses are likely to increase and that it may not be able to "achieve or maintain profitability in the future". JP Morgan, Credit Suisse and Jeffries are the main underwriters of the IPO process. The total amount of money consumers spent on Lyft trips rose 76 percent in 2018 to $8.1 billion, an increase driven in large part by new users.

Kochan told CNN Business that it's "clear" that both Uber and Lyft are anxious the drivers will use the IPO filings as "an opportunity raise their voices and ask how will this benefit them".

Both companies are set to face questions about when and how they will become profitable. However, the company is also seeing its operating losses grow.

Lyft reported 18.6 million active riders and 1.1 million drivers at the end of 2018 across the us and Canada. For one, the company's revenue is exploding, boasting $2.2 billion in revenues for the 2018 year.

He also said he wasn't anxious about beating Uber to an IPO or vice versa. Its US ridesharing market share was 39 percent in December 2018, up from 22 percent in December 2016.

Both Uber and Lyft declined to comment.

"Lyft is dwarfed by Uber, but it's clearly growing and edging into Uber's customer base", Kennedy said.

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Editor's note: An earlier version of this story said revenue was up 528 per cent from 2017. Lyft also purchases carbon offsets to make all its rides carbon neutral. The company's explanation for that boost points a not-so-subtle finger at Uber's near-meltdown. In its early days, Lyft encouraged drivers to strap fuzzy pink mustaches to their front bumpers and to greet riders - who often sat in the front seat - with fist bumps.

On Friday in its prospectus, Lyft continued to emphasize that image as giving it an edge.

Lyft gained traction in the United States after a spate of scandals surfaced at Uber in 2017, including sexual harassment allegations.

Regarding future growth, Lyft foresees a world relying nearly entirely on transportation services like ride-sharing, self-driving cars, and short-range electric bikes and scooters.

The company's IPO includes a dual-class stock structure, with one class of shareholders getting 20 votes a share and another getting just one vote a share. This is a popular structure among other Silicon Valley companies, including Alphabet, Facebook and Snap.

"Losses are going to be a concern to Wall Street and it's going to affect their valuation", said Kathleen Smith, principal at IPO research firm Renaissance Capital. "We do not take that lightly, and we intend to lead this shift with integrity, humanity and strong execution".

Under Lyft Inc's plans, drivers who have completed at least 10,000 rides on the platform will get $1,000 and those who have logged 20,000 rides as much as $10,000, the paper said.

To engage contractors who work as Lyft drivers, the company made a novel move to grant shares to drivers, a practice that is prevalent among tech companies for full-time employees.

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