Car service Lyft just put rival company Uber in the backseat. Only a handful of days ago, ride-provider Lyft went public, speeding ahead while paving the way for other high-value mixed-tech firms.
The initial public offering (IPO) started with a price of $72 a share, touting a value of more than $24 billion. This makes Lyft’s debut on the market the fifth-largest public offering since the financial crisis. And among US startups, it’s second only to Facebook’s 2012 offering. (And in case you were wondering, Uber is sitting in idle in the paperwork phase.)
How’s it going so far? It’s been a bit of a bumpy ride; Lyft shares have sputtered since IPO day when shares initially shot up more than 20%. Since that early pop on trading day one, shares have dipped and drabbed, dropping below the offer price.
But, it’s just too early to make projections about the long-term success of Lyft stock. It’s only been about a week, after all. Still, investors will be watching next month when the company’s first quarterly earnings report as a public company rolls out.
Since there’s little to go on for predictions (for now), let’s talk about the numbers behind the IPO.
In the fourth quarter of 2018, Lyft gave 18.6 million people at least one ride. This number is up from just 6.6 million at the end of 2016. And, Lyft has a 39% piece of the ride-hailing market pie, which represents an increase from their 2016 sliver of 22%.
So, rides are good. What about losses? Hmm. Not so good, it seems. Lyft’s total costs and expenses hit $3.1 billion in 2018, an increase of 77% annually. And, the ride provider also reported a loss of $911 million last year, up from $688 million a year earlier. According to S&P Global Market Intelligence, these figures mean that Lyft will have lost more than any other US startup in the 12 months leading up to its IPO. Ouch.
Still, Lyft is cruising ahead, undeterred by its loss record. The company’s current focus is on trimming costs, and Lyft points out that, while losses are growing, you should take a look at its revenue. Company reports show that they more than doubled their sales last year, to $2.16 billion.
The bottom line here is that Lyft may well turn out to be a trailblazer. And the competition isn’t far behind. Just like Uber has already filed paperwork with the Securities and Exchange Commission (SEC), so too have other high-value tech firms, such as Pinterest, Slack, and Postmates. Companies Airbnb, Palantir and Peloton could be not-so-far behind, perhaps throwing their hats into the ring later this year. Some project 2019 to be the biggest year on record in terms of dollars raised.
And, Lyft’s move has shifted the stakes. For years, some of this country’s most successful startups have been open only to the venture capital crowd. With Lyft now on the Nasdaq, anyone with disposable income can get a piece of the action.
Just as the investment world loves a broadly diversified exchange-traded fund (ETF), no one can ignore the power of wealth in an individual company. To go from hundreds of shareholders to millions of shareholders is nothing short of phenomenal. And it’s this phenomenon that serves as a reminder that, when individual companies do well, they can achieve massive wealth. It’s what keeps us all invested in the search for the next hot stock, while we hold onto our ETFs.