Word just got out that Uber is trying to go public at a $120B valuation. But it looks like Lyft is trying to beat its arch-rival to the punch!
The Wall Street Journal just reported today that Lyft picked a dream team banking squad led by JPMorgan Chase to lead its IPO, scheduled for early ’19.
Lyft’s banking on a market cap well above $15.1B, the valuation it scored in its latest private funding round in June so investors can hit their ROI targets.
And yes, Uber will be worth around 10x that but it would be a major score for Lyft to beat its ride-hailing foe to the public markets.
Ah, the IPOs!
Just like 1980’s Hulkamania, IPOs have been running wild in 2018.
VCs are getting their 10x, investors get in on the action, and founders get stinky rich. Oh yeah, baby. And even though most of them are unprofitable, they’re still scoring massive market valuations.
So when is this gonna go down?
As of now, Uber’s worth $70B. They’ve said all along they’ve planned to pop the public markets in the second half of 2019.
But according to the WSJ report, they could speed up their schedule and go live on the public markets as early as next year. Apparently Uber received valuation proposals last month from a Wall Street goon squad of their own in Goldman Sachs and Morgan Stanley.
This is often the final stage before a company officially hires a bank to underwrite its offering. As expected, Lyft and Uber both declined to comment.
Why are they fighting to go first again?
Well, there’s no sophisticated reason behind other than the obvious. Even though it’s worth less, Lyft wants to offer ride-sharing stocks first before a competitor gets to satisfy market demand for the hot industry.
Here’s a thing to watch. Lyft is US and almost car-only. Although it’s making its play with its direct-to-user micromobility play with bikes and electric scooters.
Uber, on the other hand, is worldwide, operating in 600 cities in 78 countries. Uber’s even teaming up with taxis around the world and ish.
(Editor’s note: Watch out for tomorrow’s lead story on that!)
UberEats > Lyft
Another factor to consider. Uber’s UberEats—their fast-growing food delivery service—alone (rumored at $20B) could be worth more than Lyft as a whole.
Here’s the kicker: Morgan Stanley and Goldman Sachs’ valuation targets reportedly come from Uber’s non-rides businesses. In other words, Uber’s valuation doesn’t even come from its core business.
Let that sink in for a second.
Should Lyft beat Uber to the punch, that obviously is a huge win. Despite its smaller business, when it comes to hitching a paid ride, US app users look at Uber, then look at Lyft.
On the other hand, should Uber pull off the IPO first—especially in light of this news—going public would mark a huge symbolic victory for CEO Dara Khosrowshahi who took the reigns last summer on the heels of #MeToo scandals and a mass executive exodus.
VIDEO: Here’s How You Know A Company Is F*****
Chart: All The AI Startup Exits That Made Over A Billion Dollars
Artificial intelligence—AI—is getting those investor checks. In Q2 alone, AI startups raked in $7.4B in funding. And if you look at the exits, you can see why VCs are bullish. It’s a sector that’s delivering some very valuable exits.
Since 2013, seven AI companies have had billion-dollar exists—either through IPO or M&A—four of which have taken place in the last two years. Here’s a chart from CB Insights with all seven.
10 Bizarre Things About The WeWork IPO Filing
As WeWork goes public in its recently announced IPO, professionals and entrepreneurs better take note. The sharing economy is spreading its wings beyond Uber and AirBnB.
Although less well known than those icons of the sharing economy, WeWork could change how we work in the years ahead.
That said, its IPO is a bit bizarre, as the media has been quick to point out. Here’s why.
1. We Work Is Running Spectacular Losses
In 2018, the company had a net loss of $1.9 billion. In the first 6 months of 2019 alone, it lost another $900 million.
2. Investors Worry The Company Will Run Out Of Cash
MKM Partners’ Rohit Kulkarni said the company faces a real prospect of running out of cash in a few months’ time.
3. WeWork Is Spending Money Like It’s 1999
The startup has a burn rate of $150m-$200m a month.
4. Over $47 billion In Future Lease Obligations
WeWork will need to make a ton of money in the future to make it all work.
5. Its Contracts With Users Are Short Term
The startup keeps things flexible for users but is taking on more of the risk itself.
6. The Company Could Be On The Hook If Users Leave
If users defect, WeWork’s rent obligations remain. This should worry any investor.
7. WeWork’s Business Model Is Iffy At Best
The company has declining revenue per user, on top of its failure to be profitable. In other words, things could get worse for investors.
8. Conflicts Of Interest With The CEO
WeWork leases some buildings owned in part by CEO Adam Neumann, paying millions in rents for it.
9. WeWork’s China Assets A Puzzle For Investors
The company’s assets in China are puzzling for investors, and they carry unique risks yet to be fully understood.
10. Despite All Its Troubles, WeWork Has A Staggering Valuation
This unicorn has a valuation of $47 billion. Some in the business media say it’s based on smoke and mirrors. The IPO could be a good test of whether the valuation will hold.