Lyft pulls ahead of rival Uber in race to IPO

Most Silicon Valley startups are racing toward one goal — eventually going public and making their founders, employees and investors a boat-load of money.

Now San Francisco-based ride-hailing startup Lyft is making its first move toward reaching that milestone. And that means Lyft is on track to beat rival Uber to the public market — despite being significantly smaller (Lyft is worth $7.5 billion, while Uber is worth nearly $70 billion).

Lyft is close to hiring an IPO advisory firm — the first step in filing for an offering, anonymous people close to the matter told Reuters Thursday. The firm that Lyft selects will help the company choose underwriters and plan the offering.

Word is the IPO could come as soon as next year.

The news comes as Lyft is touting its explosive growth — you can now hail a Lyft anywhere in 40 U.S. states — and Uber meanwhile is trying to recover from months of explosive scandals that include allegations of sexual harassment and sexism at the company, and federal probes into the company’s activities. Uber’s new CEO, Dara Khosrowshahi, has said to expect an Uber IPO in 18 to 36 months.

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For years investors and tech industry watchers have been anxiously waiting for IPOs from both Lyft and Uber, but instead of taking the plunge into the public market, both companies have continued to swell their coffers by taking investment from venture capital firms and other private sources. And they’re not the only ones — experts say startups are holding out longer before going public.

Many companies are worried that the public market won’t support their sky-high valuations, and if they price an IPO, it will have to be at a discount. That’s what happened to Palo Alto-based enterprise software company Cloudera, which saw its valuation sliced nearly in half at the end of its first day as a public company. But the company’s shares spiked more than 20 percent in its first day trading in April, and are still trading above its IPO price.

Other recent tech IPOs have underperformed. Meal delivery kit company Blue Apron flatlined in its first day trading in June, and now is trading at barely more than half its IPO price. Shares of Venice-based Snapchat parent Snap plunged after its March IPO.

But Los Gatos-based TV streaming company Roku, which started trading publicly on Thursday, so far has been a rousing success. The company’s shares climbed nearly 70 percent in its first day trading, a 2017 record for a U.S.-based company.

Photo: Lyft’s signature mustache (Courtesy of Lyft)


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