Lyft Confidentially Files IPO Paperwork With SEC

On Thursday morning, Lyft—the smaller half of America’s ride-hailing duopoly—confidentially filed a draft S-1 with the U.S. Securities and Exchange Commission, according to a brief press release from the company.

At this time, the proposed price range and number of shares to be offered are still being decided, according to Lyft. Its release says that the IPO is expected to start “after the SEC completes its review process, subject to market and other conditions.” It’s widely expected that Lyft shares will make their public market debut during the first half of 2019.

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Filing this paperwork is among the first official steps private companies take to raise money from public markets in an initial public offering (IPO). The 2012 Jumpstart Our Business Startups (JOBS) Act created a path for smaller companies (those with $1 billion or less in revenue) to quietly file IPO paperwork with the regulator, but starting in July 2018 all companies are now able to file draft S-1 paperwork confidentially. That’s what Lyft has done here, but the company will have to update its paperwork at least 15 days before soliciting investment during a pre-IPO “road show.”

Since its inception in May 2012, Lyft has raised over $4.91 billion in venture funding. Its most recent outside funding, a $600 million Series I round closed this past June, valued the company $15.1 billion post-money.

Lyft has raised money from venture investors including Mayfield Fund, Floodgate, Founders Fund, Andreessen Horowitz, and others.1 Corporate investors in the ride-hailing company include CapitalG (the growth equity fund backed by Google’s parent company, Alphabet), Japanese ecommerce site Rakuten, General Motors, Alibaba, and Chinese transportation behemoth Didi Chuxing.

In October, our EIC Alex Wilhelm wrote about how a Lyft IPO could value the company at more than $15 billion compared to an estimated valuation of $120 billion for its chief rival, Uber. He also pointed out that both companies are “deeply unprofitable,” with Lyft being even more unprofitable than Uber at least on a percent-of-revenue basis.

Here’s some financials from the first half of the year that Alex put together:

• H1’18 revenue: $909 million.
• H1’18 revenue growth from H1’17: 120.6 percent.
• H1’18 net loss: $373 million.
• Net margin: -41.4 percent.

If you assume that Lyft earns about the same amount of revenue in the second half of 2018 as it did in the first half, its revenue for the year would total $1.82 billion. By Alex’s calculations, Lyft, at $15 billion is worth just 8.3 times more than that. And its ambitious IPO valuation would be around 6.9 times its 2018 revenue.

Uber too is expected to go public in the relatively near future. Media reports indicated that the company, according to bankers, could be worth as much as $120 billion—a figure that was much higher than Uber’s own private valuations. This is a company that lost $1.375 billion in the first half of 2018. 2

The competitors have somewhat been in a race to see who will file an IPO first. And let’s face it, the performance and pricing of one will almost certainly affect the performance and pricing of the other.

Given how much capital Lyft and its ilk are still burning, it’ll be interesting to see how securities regulators and, eventually, public market investors, react when shares finally hit Wall Street. VCs have been able to hold their nose at the cash fire so far, but will everyone else?

Illustration: Li-Anne Dias