Uber and Lyft are set to produce a pair of the most valuable public offerings conducted by US VC-backed companies in the last 10 years.
Both San Francisco-based ridehailing companies have made headlines this week with news about their imminent IPOs. Uber has received proposals from Goldman Sachs and Morgan Stanley to lead a stock market debut that would value it at up to $120 billion, nearly doubling its private market valuation, according to a report from The Wall Street Journal. And Lyft has selected JPMorgan Chase, along with Credit Suisse and Jefferies, to lead an offering that would likely top its current valuation of $15.1 billion, also per the WSJ.
At those valuations, Uber and Lyft would produce the first and fourth most valuable VC-backed IPOs in the US since 2008, respectively, and join a list of elite public tech companies:
In the chart above, the green bars indicate companies that aren’t yet public. The valuations listed are based on media reports and could change. For Lyft, reports indicate a minimum valuation; for Uber, reports indicate a maximum valuation.
Rumors of Uber and Lyft hitting the public markets sometime next year have intensified over the last few months, and now reports indicate that both companies are likely to conduct their IPOs within the first half of 2019.
Dara Khosrowshahi, Uber’s chief executive, said earlier this year that he’d like his company to go public in 2019, but didn’t provide more specific timing. The arrival in August of Nelson Chai as the company’s CFO after a three-year vacancy was a step in the right direction, and now the WSJ report indicates that it’s very likely the IPO will happen sooner rather than later. SoftBank, which paid around $9 billion total to become Uber’s largest shareholder back in January, reportedly stipulated that if Uber doesn’t go public by the end of next year, the ridehailing company would be required to allow major investors to conduct a secondary sale for their stakes.
That stipulation, along with Uber’s high valuation and growing revenue, is an indicator that the company may be in somewhat of a rush to go public. The company hit a valuation of $72 billion with a capital infusion from Toyota in August, solidifying its position as the most valuable VC-backed company in the US. And Uber is in a solid financial position. It will generate up to $11 billion in revenue this year, per reports, up from just about $8 billion in 2017.
Until now, most signs have pointed to Lyft beating Uber in the race to the public markets. Back in August 2017, reports emerged that Lyft was nearing a deal to choose an advisory firm for its IPO, and at the end of last year, the company brought on its first VP of corporate development and investor relations. Lyft has also gained on Uber in terms of market share in recent years, reporting earlier this year that it reached a 35% US market share, up from 15% in the beginning of 2016. That’s likely partly due to the long list of struggles Uber has run into over the last few years, including sexual harassment allegations and lawsuits. Lyft’s financials are also improving: The company’s 3Q 2018 revenue was $563 million, up from $300 million in 3Q 2017.
And although Lyft’s valuation is just a fraction of Uber’s, it’s still one of the most valuable VC-backed businesses in the US. From the beginning of 2016 to mid-2018, Lyft’s valuation nearly tripled. In February 2016, it was valued at $5.5 billion, and in June of this year, it brought in a $600 million funding round at a valuation of $15.1 billion. When it does go public, Lyft’s IPO is set to value the business at more than $15 billion, per the WSJ.
Both companies are about the right age for an IPO. Uber would be 10 years old and Lyft would be seven years old by the time of a 2019 IPO. The median time to IPO for North American and European companies is just over eight years, per PitchBook data that was compiled in August.
Airbnb and Slack, valued at $31 billion and $7.1 billion, respectively, are also expected to go public in 2019.
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