Exclusive: Lyft close to selecting IPO adviser - sources

September 28, 2017

SAN FRANCISCO (Reuters) - Lyft Inc is close to hiring an initial public offering (IPO) advisory firm, in the first concrete step by the second biggest U.S. ride service company to become publicly listed, according to people familiar with the matter.

Lyft’s IPO preparations come as its larger competitor, Uber Technologies Inc, is attempting to recover from a range of scandals. In August, Uber’s new CEO Dara Khosrowshahi set a new tentative timeline for Uber’s IPO of between 18 and 36 months.

An IPO would offer Lyft access to capital beyond its traditional route of private investments. The San Francisco-based company has been in discussions this month with Google owner Alphabet Inc about securing an investment, Reuters has reported.

The IPO advisory firm will help Lyft’s management select underwriters and plan the offering, which could come as early as next year, the sources said this week, asking not to be identified because the deliberations are confidential. The timing of the plans could still change, the sources added.

The ride-hailing company has already finished the interviews for picking the IPO advisory firm and is expected to make a decision shortly, the sources said. IPO advisory firms work independently from the investment banks and do not sell shares in an IPO.

Top investment banks face a dilemma with regards to whether they should be underwriters on Lyft’s IPO, since many of them, such as Goldman Sachs Group Inc. and Morgan Stanley, are already lenders to its chief rival Uber. A bank that aligns itself with Lyft could potentially find itself shut out from a much larger IPO by Uber down the road.

Lyft was valued at $7.5 billion in its latest funding round in April, when it raised $600 million in fresh funding from investors such as private equity firm KKR & Co LP. This $7.5 billion valuation was up from $5.5 billion more than a year earlier, in a fundraising round in which General Motors Co participated.

Uber, which was valued at $68 billion in its last funding round, is the largest private company backed by venture capitalists in the world.

Uber and Lyft have been losing money as they compete at all costs to grow their user base with low fares for customers and incentives for drivers.

Both IPOs would test investor tolerance for a lack of profitability when it comes to iconic technology unicorns. Many such companies have chosen to remain private because of concerns that an IPO would assign them a lower valuation than their latest fundraising round.

Snapchat owner Snap Inc’s $3.4 billion IPO earlier this year was the largest by a U.S. technology company in three years, although its shares have since underperformed, as its quarterly earnings have fallen short of analyst expectations.

Lyft said last month it was available in 40 states and reached 94 percent of the U.S. population. Unlike Uber, its service is so far only available in the United States.

Lyft formed a self-driving car division over the summer and has announced partnerships with companies such as Ford Motor Co.

Lyft Is Planning to List Shares on Nasdaq

Feb. 20, 2019

Lyft Inc. is preparing to list its shares on Nasdaq around the end of March, according to people familiar with the matter, as the ride-sharing firm’s hotly anticipated plan to join the public markets comes into focus.

The company, which submitted its IPO paperwork with the Securities and Exchange Commission late last year, is expected to make the filing public as early as next week, the people said. The filing will name Nasdaq as the listing exchange, they added.

Lyft is planning to launch its roadshow pitch to investors in mid-March, with the expectation of pricing shares later in the month, according to the people.

The listing marks an important win for the Nasdaq as it competes with the New York Stock Exchange to be the venue of choice for high-profile technology companies. In recent years, the NYSE has notched several big victories in the listing war, including that of Spotify Technology SA last year and Snap Inc. in 2017.

There will be plenty more battles to come as many private technology companies lay plans for IPOs, prompting predictions that 2019 could be the busiest year ever for new issues, as measured by money raised.

The recent partial government shutdown, which hampered the SEC’s ability to approve listings, put a number of companies’ plans on hold, but the speed with which Lyft is proceeding shows the shutdown—while the longest in U.S. history—may not have a lasting impact on the new-issue market.

Also in the queue is Lyft’s rival Uber Technologies Inc.

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(More to Come)

Lyft’s IPO Filing Offers Look at Size, Scope of Ride-Hailing Company

March 1, 2019

Lyft Inc. made its IPO documentation public Friday, a move that fires the starting gun on what’s expected to be one of the biggest years for tech IPOs ever.

This filing sets the company up to begin trading in late March and to start its so-called roadshow to pitch the business to investors in the next several weeks.

Lyft’s filing depicts a company experiencing sharp growth but also ballooning spending -- a typical picture of big startups. Last year, Lyft posted revenue of $2.16 billion, up from $1.06 billion in 2017 and $343.3 million in 2016. The company’s net loss, meanwhile, expanded to $911.3 million from $688.3 million in 2017 and $682.8 million in 2016. The company said its number of active riders was 18.6 million at the end of 2018, nearly triple the 6.6 million it had at the end of 2016.





The company expects to begin trading on the Nasdaq Stock Market with the symbol LYFT.

Lyft’s founders, John Zimmer and Logan Green—who serve as president and chief executive, respectively—will own shares that will receive 20 votes per share compared to one vote per share for common shareholders. The company noted that the two men would have significant influence over major decisions at the company, ranging from the election of directors to whether to sell one day.

The Journal also previously reported Lyft’s plans to give its founders outsize control. Unlike many of the other fast-growing Silicon Valley startups, the Lyft co-founders had not put a supervoting structure in place while it was a private company. Instead, they held voting power proportional to their economic stake.

The company warned that its dual-class structure could bar it from inclusion in certain stock indexes and in turn, potentially weigh on its stock price.

Some of the biggest public tech companies, including Facebook Inc., Google parent Alphabet Inc., and Snap Inc., have supervoting structures that give their founders control.

While the IPO filing didn’t specify a potential valuation, Lyft is widely expected to achieve a price in the public market that far exceeds its last private valuation of $15.1 billion as of early 2018, according to people familiar with the offering. Meanwhile, Uber, has received proposals from bankers that value it as high as $120 billion, the Journal has reported.

As part of the IPO, Lyft said it would take the rare move of offering one-time cash bonuses to drivers with the option to use the money to buy IPO shares. Lyft said it would be paying out its bonuses to the drivers, who would need to have logged at least 10,000 rides by Feb. 25 to be eligible for the $1,000 bonus or 20,000 rides for the $10,000 bonus, on or about March 19.

In the filing, Lyft touted its expanding market share in the U.S., which it said had grown to 39% in December 2018, up from 22% in December 2016. The company said the growth came from both new drivers and riders as well as increased ride frequency.

The company also emphasized its “singular focus on transportation.” In doing so, Lyft is distinguishing itself from rival Uber, which is expected to promote—during its pitch to investors—that it has had success with business units such as prepared-food-delivery unit Uber Eats and trucking business Freight.

Uber operates in about 64 countries world-wide, while Lyft is just in the U.S. and Canada.

Steer Clear Of Lyft's IPO

Mar 14, 2019

The first big IPO of 2019 is here. This year could set new IPO records (for size and lack of profits), and it all starts with Lyft (LYFT). The rideshare company is expected to trade within the next few weeks at a market cap between $20-$25 billion.

At the midpoint of that proposed range, Lyft earns my unattractive rating. It shares many of the same characteristics that have led me to warn investors away from other recent IPO’s: growing losses, low barriers to entry, poor corporate governance, and an unrealistically high valuation. These factors make Lyft this week’s Danger Zone pick.

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[ SNIP ]

Don't Read This If You're Bullish About Lyft

March 14, 2019

What does it say about Lyft’s financial viability that each car ride is worth the same as a scooter or bike trip? You decide.

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[SNIP ]

Lyft to Seek Valuation of Up to $23 Billion in Its IPO

March 17, 2019 10:41 p.m. ET

Lyft Inc. plans to peg its valuation at between $21 billion and $23 billion when the ride-hailing service kicks off the roadshow to market its initial public offering Monday, according to people familiar with the matter.

The range, equating to between $62 and $68 a share, is preliminary and could change by the time the shares start trading around the end of next week, the people said. The overall valuation includes the roughly $2 billion Lyft is expected to raise in the offering. The company and its underwriters will set a final IPO price based on feedback from investors in the roadshow.

Even at the low end of the expected range, Lyft would be valued far more than it was in its last private valuation—$15.1 billion in early 2018. That would make it one of the largest U.S.-listed new technology offerings since Alibaba Group Holding Ltd. made its debut in 2014, according to Dealogic.

Last year, Lyft posted revenue of $2.16 billion, more than double the 2017 figure. It nearly tripled the number of active riders from the end of 2016 to the end of 2018. The company’s net loss, meanwhile, expanded to $911.3 million last year from $688.3 million in 2017.

Lyft’s founders, John Zimmer and Logan Green—who serve as president and chief executive, respectively—together own roughly 7% of Lyft, but will have nearly 50% voting control, according to people familiar with the matter. The men will own shares that will receive 20 votes each, compared with one vote per share for common stockholders. That will give them significant influence over major decisions at the company, ranging from the election of directors to whether to sell one day.

Lyft will market the offering to mutual funds and hedge funds in meetings in New York and other cities. The shares could be priced as soon as March 28 and begin trading the following day on Nasdaq Stock Market with the symbol LYFT.

Lyft IPO Oversubscribed Ahead of Listing Next Week

March 19, 2019

Lyft Inc. built itself into a fierce challenger to Uber partly through aggressive price cutting. Now investors who want a piece of America’s second-largest ride-hailing company will likely need to pay a premium when the stock starts trading next week.

The San Francisco-based company has only been on the road marketing its initial public offering for two days, but investors have already been informed that the listing is oversubscribed at the current price range, said people familiar with the matter, who asked not to be identified because the details are private.

Based on early commitments, Lyft executives and bankers see demand far exceeding the number of available shares, making it likely that the company will surpass the $23 billion valuation it’s seeking, said the people.

Lyft is expected to price its shares on March 28 and begin trading on the Nasdaq the next day. If excessive demand continues, the company could decide to sell more shares or price them above the original range of $62 to $68 a share.

Strong demand ahead of an offering doesn’t necessarily translate to success in the public markets. Facebook Inc. and Snap Inc. were each oversubscribed before their IPOs. Facebook’s stock had a dismal first year, and Snap is currently trading well below its offering price.

The initial enthusiasm for Lyft indicates that many investors are willing to overlook the company’s losses, which are substantial. Last year, Lyft lost $991 million on revenue of $2.2 billion. Strong interest in Lyft’s shares bode well for Uber Technologies Inc., which is expected to kick off its IPO in April, people familiar with the matter said.

Bankers have compared Lyft in the discussions with investors to so-called marketplace companies like food delivery operator Grubhub Inc. and luxury fashion retailer Farfetch Ltd., said a person familiar with the matter. They’ve also drawn comparisons to Facebook, Netflix Inc. and Square Inc. Lyft wants to be in good company. Such comparisons can impact how much investors are willing to pay for the stock.

Lyft to Price Shares Above Targeted Range of $62 to $68 in IPO

March 26, 2019

Lyft Inc. is expected to price its shares above the targeted range for its initial public offering, in a sign of strong investor demand ahead of the ride-hailing service’s imminent debut.

Lyft, which is currently conducting a roadshow to market the shares, has told some investors that it is likely to price the stock above its previously targeted range of between $62 and $68 a share, according to people familiar with the deal. While it is unclear what level it will pick when the shares are priced late Thursday, it is unlikely to be as high as $80 and is more likely to be in the low $70s, some of the people said.

That means that Lyft would be valued at more than $23 billion on a fully diluted basis, which was the top end of the range. The shares are to begin trading Friday.

But in a sign of robust investor interest, Lyft has attracted standing-room-only crowds throughout its roadshow that started last Monday.

Investors who attended expressed concerns about the company’s path to profitability, given that Lyft’s $911 million loss last year was the biggest of any other U.S. startup in the 12 months preceding its IPO, according to S&P Global Market Intelligence.

The company has worked to assuage these worries by emphasizing how it is working to get costs down, some people said. One way it plans to do so in the near-term is by lowering insurance costs—currently one of the biggest expenses for Lyft—as it gains greater scale, the company’s executives told investors in presentations. Lyft executives also outlined that longer-term, the adoption of autonomous vehicles could be a boon to its bottom line.

Unlike most sizable private technology companies, Lyft has relatively few mutual funds, with the exception of Fidelity Investments, among its investor base. Other big funds are expected to buy shares for the first time in the IPO, pushing up demand and, potentially, the price of the stock.

Lyft and its underwriters don’t plan to exceed $81.60 a share. At that price—more than 20% above the high end of the targeted range—the company would need to file paperwork with a new range with the Securities and Exchange Commission.

Lyft Raises Its IPO Target, Aims to Raise as Much as $2.2 Billion

March 27, 2019

Lyft Inc. raised the price range of its initial public offering set for Thursday, adding to what is set to be the biggest listing of the year so far.

The second-largest ride-hailing company in the U.S. is aiming to sell 31 million shares at $70 to $72 each to raise as much as $2.2 billion, according to a filing Wednesday. Lyft had been marketing the shares at $62 to $68 apiece.

At $72 a share, Lyft would be valued in its IPO at about $24.7 billion, including restricted shares and so-called greenshoe shares that could be issued later by the underwriters. Uber, the world’s largest ride-hailing company, is expected to publicly file for its offering in April, kicking off a listing that could value the company at as much as $120 billion, people familiar with its plans have said.

Lyft prices IPO at $72 per share: Source

Lyft’s initial public offering priced on Thursday. The company previously expected to price its shares between $70 and $72.

Shares in the ridehailing company are expected to start trading on the Nasdaq on Friday, under the ticker “LYFT.”

The company faces formidable competition from Uber, according to its S-1 filing released earlier this month. Lyft claimed 39 percent of the U.S. market at the end 2018, up 17 percentage points over two years, it said in the filing.

In 2018, Lyft reported:
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• Net loss: $911 million, an increase of 32 percent from 2017
• Revenue: $2.2 billion, double the revenue it saw in 2017
• Bookings: $8.1 billion, an increase of 76 percent from 2017

Funded early on by venture firms including Floodgate, K9 Ventures, Mayfield Fund, and Peter Thiel’s Founders Fund, Lyft is one of several maturing tech startups expected to go public this year. Others expected to go public in 2019 include Uber, Pinterest, Zoom and Slack. (Uber, Lyft’s chief rival, is expected to release its S-1 and go public next month.)

Below is a chart that shows the price-to-sales ratio on the first day of trading of companies that have gone public before 2019, and of Lyft and Uber. In the past decade, tech companies have entered the public sector with an average price-to-sales ratio of 3.7. Lyft and Uber may have ratios nearly three times as high, based on information disclosed in their initial IPO registration documents—though not as high as some well-known tech giants.

Buying Lyft stock requires making ‘too many big assumptions,’ firm warns amid IPO hype

Apr 1 2019

Guggenheim restrained its enthusiasm for shares of Lyft on Monday, beginning coverage of the rideshare company’s stock with a neutral rating due to what the firm sees as a hazy outlook.

“We simply have to look too far out with too many big assumptions in order to make a case for the stock,” Guggenheim analysts Jake Fuller and Ali Faghri wrote in a note to investors.

Fuller and Faghri said Guggenheim does “understand the excitement” surrounding Lyft’s IPO, as the company has a large market to grow into and is on the “front lines of a shift” in transportation. But several “key issues” remain for Lyft, the analysts said. Those include whether the company can sustain its revenue growth, build its investments in nascent markets like electric scooters and self-driving, all while driving its total valuation higher.

“Our rating is primarily a function of a lack of visibility on the path to profitability,” Fuller and Faghri said. “LYFT did provide healthy margin objectives, but it did not really talk about how it might get there”

Guggenheim does not have a price target on the stock.

Analyst slaps $42 target on Lyft — 42% below its IPO price — says buying it is a ‘leap of faith’

Apr 2 2019

Michael Ward, an analyst at Seaport Global Securities, initiated coverage of the stock with a sell rating and a 12-month price target of $42 a share. Ward’s price target implies a 39.1 percent downside from Monday’s close of $69.01.

For Ward, the wildcard surrounding Lyft is its valuation. “In order to justify its current market valuation, investors need to take a big leap of faith that the millennials and later generations will forego ownership of a car and opt instead for reliance on a ridesharing service,” he said in a note, adding he believes people will continue to own cars and use ride-sharing services as a “convenient supplement.”

“While we believe the ridesharing market will continue to grow and expect LYFT to be a prime competitor, in our view, current valuations reflect an overly optimistic view of consumer behavior in the US,” Ward said.

Lyft sees the “transportation as a service” market being worth $1.2 trillion in the U.S., according to the analyst. However, Seaport sees the “the addressable market is much smaller, looking instead at the $70 billion ground transportation market.”

Lyft short-sellers are in ‘overdrive’ after IPO

Apr 3, 2019

In just a few days since Lyft Inc.’s long-awaited initial public offering, the ride-hailing company’s shares have become the second-largest short in the U.S. trucking sector.

That’s according to Ihor Dusaniwsky, managing director of financial analytics firm S3 Partners, who wrote Wednesday that Lyft short-sellers have “gone into overdrive,” shorting more than 38% of the 32.5 million share float.

“We can expect Lyft to be a significant short in the market for long time, especially with analysts already posting ‘sell’ recommendations less than a week after its IPO,” Dusaniwsky said.

Stock loan supply is beginning to stabilize, according to S3. Dusaniwsky saw stock-borrow rates falling steadily during Wednesday’s trading session, reaching about two-thirds of Tuesday’s levels by the afternoon, though Lyft still has by far the largest borrow fee among stocks with more than $50 million in short interest.

Carl Icahn Sold Lyft Stake Prior to Initial Public Offering

April 3, 2019

Billionaire investor Carl Icahn sold his roughly 2.7% stake in Lyft Inc. ahead of the ride-hailing company’s initial public offering last week, according to people familiar with the matter.

Jonathan Christodoro, a former Icahn Capital LP managing director who sat on Lyft’s board until last month, connected Mr. Icahn with the buyer of the stake worth roughly $550 million at the IPO price, some of the people said. The buyer’s identity couldn’t be learned.

The exact timing and motivation for Mr. Icahn’s move weren’t clear, though he had held the stake for roughly four years—a relatively long period for him. The activist investor, who rarely invests in private companies, had been unhappy with Lyft’s plan to use supervoting shares to give its two founders near-majority voting rights, some of the people said.

It isn’t clear what price Mr. Icahn got for his shares, but the investment was sure to be a successful one for the 83 year-old. He had invested roughly $100 million in Lyft in 2015 at a valuation of $2.5 billion, and later added $50 million at the same valuation. The IPO valued Lyft at $24 billion, or $72 a share, though he likely sold it for a bit less than that.

Lyft’s pre-IPO investors are prohibited from selling shares until a lockup expires 180 days after the offering, and the buyer of Mr. Icahn’s stake is subject to that.

Lyft shares should only be worth $59 according to valuation guru

Apr 9 2019

When Lyft went public on March 29, it was valued at more than $20 billion, with shares priced at $72.

The ride-hailing company should be trading closer to $59 per share, and valued closer to $15 billion, according to Aswath Damodaran, who teaches corporate finance and valuation at the Stern School of Business at New York University.

On CNBC’s Fast Money, Damodaran explained there’s fundamental problem with Lyft’s business model that may have helped the company grow fast, but makes it hard for the company to make money:

At least Lyft is focused, and not committed to expensive, risky side projects like Uber, Damodaran noted.

Uber recently spent $3.1 billion to acquire Careem, a ride hailing business that serves passengers in the Middle East. Uber also spent money to set up a research and development division, Uber ATG, that is working on everything from self-driving car technology to air taxis.

By contrast, Lyft is primarily focused on maintaining and growing its marketshare in North America.

Damodaran said: “I’d take Lyft over Uber because Uber wants to be all things to all people. You’d think they’d learn from their mistakes. They tried in China and had to back out of China. I think being less ambitious in this business, until you figured out a business model, is better.”

Lyft First Quarter 2019 Earnings
May 7, 2019 at 2:00 PM PDT

Lyft Earnings: What to Watch

May 7, 2019 5:30 a.m. ET

EARNINGS FORECAST: Ultimately, Lyft needs to prove that it has a path to profitability.

Analysts surveyed by FactSet expect Lyft to report a first-quarter loss of about $978 million—more than the $911.3 million loss it reported in 2018 for the full year. On an adjusted basis, analysts expect a loss of about $274.1 million, or $3.77 a share.

Lyft previously disclosed that had its initial public offering occurred by Dec. 31, it would have recognized $684.8 million in stock-based compensation expense for restricted stock units and more than $600 million more of unrecognized stock-based compensation.

REVENUE FORECAST: Lyft is expected to report about $740 million in revenue, nearly double from a year earlier. Analysts will be looking at the rate of growth while keeping a close eye on promotional spending and discounts.

RIDERS: Lyft has a lot riding on the number of so-called active riders who regularly use its services — and for that matter, how much it can make from each of them.

The number of active riders has nearly tripled over the two-year period through Dec. 31, when Lyft reported 18.6 million active riders However, the company reported growth of 6.9% between the third quarter of 2018 and the fourth quarter. It was the lowest linked-quarter growth rate in the 11 comparable quarters of results the company has disclosed.

Revenue per active rider, meanwhile, reached $36.04 in the December quarter, up from $27.34 a year earlier.

Earnings: Analysts surveyed by FactSet expect Lyft to report an adjusted loss per share of $4.85. According to Estimize, the average projection calls for $2.49 a share in losses.

Revenue: The FactSet consensus is for $740.1 million in first-quarter revenue, while the average projection on Estimize calls for $746 million. A year ago, Lyft recorded $397.2 million in March-quarter revenue.

Lyft and Uber heaped promotions on riders in the lead-up to their initial public offerings, and these discounts are expected to factor into Lyft’s latest financials.

Uber disclosed in its prospectus that it saw increased promotional spending and competitive activity in the first few months of the year, which “could be a headwind to Lyft in its first quarter as a public company,” said Guggenheim’s Jake Fuller, who rates the stock a hold. If so, look for an impact to Lyft’s take rate, or the amount of each fare that the company retains.

Given heightened promotional activity prior to the IPO, the key question is whether management expects to pull back on this discounting now that it’s offering is out of the way and Uber’s is about to take place. Lyft was thought to be boosting its market share by offering cheap rides ahead of its investor roadshow, but share gains may be less important now that the company is public.

Nonfinancial metrics are important when evaluating Lyft’s results, and the company is expected to show continued growth in active riders and rides taken. Lyft had 18.6 million active riders in the December quarter who took a combined 178.4 million rides. Susquehanna analyst Shyam Patil expects that key drivers of growth in the rider base include marketing and increased supply of drivers, as well as geographic expansion.

First Quarter 2019 Highlights

• Lyft reported Q1 revenue of $776.0 million versus $397.2 million in the first quarter of 2018, an increase of 95 percent year-over-year.
• Net loss for Q1 includes $894 million of stock-based compensation and related payroll tax expenses, primarily due to RSU expense recognition in connection with our initial public offering. As a result, net loss for Q1 2019 was $1,138.5 million versus a net loss of $234.3 in the same period of 2018. Net loss margin was not meaningful in the quarter and (59.0%) in the first quarter of 2018.
• Adjusted net loss was $211.5 million versus an adjusted net loss of $228.4 million in the first quarter of 2018. Adjusted net loss is adjusted for amortization of intangible assets, stock-based compensation expense, payroll tax expense related to stock-based compensation, changes to the insurance reserve attributable to historical periods, and cost related to acquisitions.
• Lyft reported Contribution of $384.9 million versus $140.4 million in the first quarter of 2018, up 174% year-over-year. Contribution Margin increased to 49.6% from 35.4% versus the first quarter of 2018.
• Adjusted EBITDA was ($216.0) million versus ($238.7) million in the first quarter of 2018. Adjusted EBITDA Margin was (27.8%) versus (60.1%) in the first quarter of 2018.
• Lyft’s IPO Registration Statement was declared effective on March 28, 2019. The IPO closed on April 2, 2019.

Outlook:

For Q2, we anticipate:

• Total revenue to be between $800 million and $810 million
• Adjusted EBITDA loss to be between $270 million and $280 million

For FY 2019, we anticipate:

• Total revenue to be between $3.275 billion and $3.3 billion
• Adjusted EBITDA loss to be between $1.15 billion and $1.175 billion

Alphabet's Waymo, Lyft to team up to offer robotaxis in Phoenix

May 7, 2019

Alphabet Inc.'s driverless-car unit Waymo said late Tuesday it will soon begin offering rides on its driverless cars in the Phoenix area through the Lyft Inc. app. Waymo will deploy 10 vehicles on Lyft over the next few months, and once those vehicles are on the platform Lyft users in the area will have the option to select a Waymo directly from the Lyft app, Waymo said. Initially, safety drivers will be in the vehicle. The partnership with Lyft will give Waymo's teams the opportunity to collect valuable feedback from customers, Waymo said. Financial terms of the partnership have not been disclosed.