Uber vs Lyft: how do their IPOs compare?

Steven Loeb · May 10, 2019 · Short URL: https://vator.tv/n/4df4

Uber floundered in its debut but still ended with an $82 billion valuation

Of all of the big name companies looking to enter the public market this year, like Pinterest and Slack, two of the most anticipated were Lyft and Uber. The two companies are inextricably linked together, even though they're very different in their size and scope, so it's fitting that the two rivals, which have their share of bad blood in the past, are essentially going public at the same time.

Uber made its debut earlier today, closing its first day down from its IPO price, but there is another reason for the company to be slightly nervous going forward: how Lyft has performed since it debuted in March.

Since going public, Lyft has seen its stock struggle, dropping nearly 41 percent in just six weeks to $51.60 at close on Friday. That drop is partially as a result of its first earnings report, which saw it post a loss per share of $9.02, though revenue came in higher than expected at $776 million versus $739.4 million. 

The question is whether Uber will have similar struggles as Lyft had in the coming weeks and months. Let's take a look at the numbers to see how the two companies were performing prior to their IPOs and what their first days as public companies looked like. 

Money raised prior to IPO: Both Lyft and Uber raised huge amounts of money since their founding, staying private much longer than companies would have in the past, though Uber still managed to raise nearly 5x the amount Lyft did

  • Lyft: $4.9 billion since it was founded in 2012

  • Uber: $24.2 billion since it was founded in 2009

Revenue year prior to IPO: It's not surprising that Uber made 5x the revenue that Lyft did in 2018, given that Lyft still hasn't expanded operations beyond the United States, while Uber is a global company, operating in over 600 cities and 65 countries. Other than that, the two companies have a nearly identical business model, taking 20 percent of each fare and giving the rest to the driver

  • Lyft: $2.2 billion

  • Uber: $11.3 billion 

Net income prior to IPO: While Uber managed to show an unadjusted net income of $997 million in 2018, up from a loss of $4 billion in 2017, its adjusted lost was $1.8 billion, down from $2.6 billion the year prior. Adjusted profit is typically more a more accurate indicator of a company's finances due to the fact that unadjusted income allows companies to say they're profitable only because they throw their expenses into some other bucket.

Lyft, meanwhile, which did not report its 2018 income as adjusted in its S-1, saw its losses increase, with its net loss of $688.3 million in 2017 growing to $911.3 million in 2018.

  • Lyft: ($911.3) million

  • Uber: $997 million

Pre-IPO Valuation: Lyft was valued at $15.1 billion when it raised a $600 million round in June of 2018, while Uber most recently took $2 billion in debt financing in October, which valued it at $72 billion

  • Lyft: $15.1 billion

  • Uber: $72 billion

P/R prior to IPO: Despite Uber's higher revenue and valuation, the two companies have almost the same price-to-trailing revenue rate

  • Lyft: 6.9x revenue

  • Uber: 6.4x revenue

Amount raised in IPO: While Lyft sold 32.5 million shares, Uber sold 180 million shares

  • Lyft: $2.34 billion

  • Uber: $8.1 billion

Opening price: Lyft opened its first day of trading higher up 21 percent from its IPO price, while Uber opened down from its IPO price

  • Lyft: $87.24, up 21 percent 

  • Uber: $42, down 6.6 percent 

Closing price: Lyft's stock closed its first day down from its initial price but still above its IPO price, while Uber closed down 7.6 percent

  • Lyft: $78.29, up 8.7 percent

  • Uber: $41.57, down 7.6 percent

Post-IPO Valuation: Lyft ended its first day of trading with its valuation up 60 percent from its pre-IPO value, while Uber saw its value grow 14 percent 

  • Lyft: $24.3 billion

  • Uber: $82 billion

P/R after IPO: After its IPO, Lyft's P/R rate rose 59 percent, while Uber's rose by 13 percent

  • Lyft: 11x revenue

  • Uber: 7.25x revenue

It should be noted that how companies perform in their first day, or even their first few quarters, isn't a great indication of how companies will do over the long haul. On Facebook’s first day in 2012, for example, its stock closed the day a mere 0.6 percent over its initial price, and just 23 cents above its IPO price. Its market cap at the time was $104 billion. In its first earnings report, the company stumbled, dropping its stock price to a new low at the time

Now, seven years later, Facebook is trading at $188.34 a share, with a market cap of $537.61 billion. 

(Image source: abc30.com)

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