Lyft IPO Vs. Uber IPO
It’s shaping up to be a banner year for tech initial public offerings (IPOs). Although many tech IPOs were delayed following the government shutdown, 2018 was overall a weak year for major tech companies going public. In 2019, however, things are looking to turn around. And that brings us to two of the largest tech IPOs on the horizon: the Lyft IPO and the Uber IPO.
Lyft and Uber Technologies, Inc. are bitter rivals in the ride-sharing space. Both are looking to be the dominant app in North America and around the world. And both are seeking to go public in 2019.
They are also the first ride-sharing apps to hit the market, making both Lyft stock and Uber stock unknown quantities.
I did an in-depth review of the Lyft IPO following the latest news breaking about the company’s valuation—around $2.1 billion—in which I broke down the differences between the Lyft IPO and the Uber IPO.
But there is one point that I believe merited its own piece: the difference in valuation.
While Lyft is going public with an impressive valuation, it pales in comparison to the rumored Uber valuation: $120.0 billion. (Source: “Uber plans to kick off IPO in April,” VentureBeat, March 14, 2019.)
While not confirmed (some analysts suggest the valuation is closer to $100.0 billion), the whopping 12-figure valuation is truly titanic.
Now, there are several reasons for the disparity in valuation between the two companies, which again you can find in my in-depth Lyft IPO review.
The main points are that Uber is selling itself on its bigger reach compared to Lyft and that Uber has a presence in markets with huge potential like freight shipping.
Lyft could eventually match its rival, but as it stands, Uber is the bigger, stronger, and more ambitious company.
But that’s where things get interesting.
With such a high starting valuation, it sets the bar extremely high for the Uber IPO. Conversely, the Lyft IPO valuation looks practically pedestrian in relative terms. This gives Lyft a huge edge.
If Lyft can continue to eat away at Uber’s market share—something it has done ever since it entered the marketplace—then it can hope to begin to climb toward such a high valuation.
Over the course of that climb, stock prices will naturally shift higher as well.
That is to say that if you consider Uber the top-end potential of Lyft (or at least an approximation of how high the company can go in the near future) then there are $117.9 billion reasons to be bullish on the Lyft IPO, while the Uber IPO is much more fraught.
There’s a lot more to the story than mere valuations, of course, but Lyft already has some powerful ambitions and plans in motion that could pay off handsomely down the road.
Combine that with the company’s relatively small valuation in comparison to Uber, and you have an IPO that is brimming with potential, whereas the Uber IPO will come in as a much more mature company with less potential for exponential growth.
Both ride-sharing IPOs are exciting, and I believe that both have the ability to do well.
But if I had to pick only one, I would support Lyft for many reasons, one of the most important being that the company simply has more room to grow moving forward compared to Uber. That said, this is not a future buy recommendation, and it remains vital that you do your own research ahead of time.