Lyft Inc. has beat rival Uber Technologies Inc. to an initial public offering, and that’s important for a number of reasons. The first is that Lyft LYFT, +4.09% is getting to set the narrative heading into the IPO process, which is crucial given that the company is smaller, more narrowly focused, and less well-known than Uber. Lyft removes an element of pricing uncertainty around the listing by going first, experts say. The company could kick off a roster of decacorns, or companies privately valued at upward of $10 billion, that are expected to go public in the year ahead. Stampede of the ‘decacorns’: Here are the big-name startups preparing for 2019 IPOs The company’s prospectus shows that Lyft plans to report revenue on a net basis, excluding the money paid to drivers. Uber — which previously detailed a similar approach to MarketWatch — will be hard-pressed to break the mold and report gross revenue, given that the businesses are the same and share PricewaterhouseCoopers as an external auditor, something unusual for fierce competitors. See also: Meet the ‘O.G.’ Uber and Lyft drivers who could cash in on the IPOs Lyft shares have been approved to list on the Nasdaq under the ticker “LYFT,” and are expected to do so Friday morning. Thursday afternoon, Lyft priced at $72 a share, at the top of its range, which it had raised Wednesday evening to a range of $70 to $72 a share after previously projecting a price between $62 and $68 a share. Lyft plans to sell 30.77 million class A shares, which would raise more than $2.2 billion at the top of the revised range with an initial valuation around $24 billion. That total could increase if underwriters exercise all the options to buy an additional 4.62 million shares. Here’s what you need to know about the company ahead of its IPO. The revenue is nothing but net The company recognizes revenue on a net basis, meaning that the company’s top-line number is significantly less than the sum total of what all riders paid over the course of a given period. Lyft is able to report revenue on a net basis, rather than a gross basis, because it considers itself an “agent” in the process of connecting drivers and riders. The company argues that it merely helps third parties provide transportation services to riders and that both riders and drivers have the ability to reject a transaction price. Opinion: How a new crop of tech IPOs may steal sentiment from FAANG stocks Uber is expected to make a similar choice as far as how it reports revenue, which has drawn criticism from accounting experts who argue that ride-hailing companies would be doing a disservice to investors by not reporting a fuller metric and giving investors a sense of what they pay their drivers. Both companies could also choose to report that metric under another name, as Lyft did with its bookings offering. Slowing revenue growth, widening losses Lyft doubled its net revenue in 2018, but that was a decelerating growth rate from a year earlier. The ride-hailing company posted revenue of $2.2 billion last year, up from $1.1 billion in 2017 and $343 million in 2016. The company’s losses are getting steeper as revenue grows: Lyft generated a net loss of $911 million in 2018, compared with losses of $687 million and $683 million in 2017 and 2016, respectively. The company’s bookings, which represent the total dollar value of transportation spending through Lyft services, climbed to $8.1 billion from $4.6 billion in 2017 and $1.9 billion in 2016. Lyft’s net revenue represented 27% of the company’s bookings in the latest period. The company gives the example of a $24 ride-hailing charge, which includes a $4 tip and a $3 airport fee: Bookings would be $17 in this example, Lyft said. Revenue would presumably be $4 or $5 in that example based on the disclosure about what percentage of bookings go to revenue, though Lyft did not provide that figure in the example. Lyft is mainly focused on the U.S. market, though it launched a Canadian business in 2017. The company provides scooter-sharing and bike-sharing services as well. On a promo spree In what seems like a fairly obvious bid to gain market share ahead of its expected listing, Lyft has been heaping discounts on riders in recent weeks. One offers 50% off 10 rides until mid-March, though it caps the savings at $6 per ride. Ride-hailing companies are already known for offering cheaper rides than can be found through traditional taxi services, and Lyft’s aggressive discounting ahead of the IPO plunges the company deeper into a price war with rival Uber. See also: Is a taxi or Uber driver more likely to rip you off on the way to the airport? “We believe that much of the growth in our rider base and the number of drivers on our platform is attributable to our paid marketing initiatives,” Lyft said in the risk-factors section of its prospectus. Growing brand awareness with both riders and drivers “can be costly,” the company contended. Lyft said its U.S. ride-hailing market share climbed to 39% in December, up from 22% a year earlier, based on third-party estimates from Rakuten Intelligence. The company discussed other pricing risks as well in its filing. One involves the company’s shared-ride product, which offers users a lower fare if they agree to share a car with someone else going along a similar route. If Lyft fails to adequately match riders or determine an appropriate fare for drivers in the case of shared rides, the company warns that its financials could be impacted. Another dual-class listing Lyft, like many other hot tech companies to test the public waters, plans to concentrate voting power with founders Logan Green and John Zimmer, though the company hasn’t yet said what concentration each co-founder will have. Green, currently the chief executive, and Zimmer, Lyft’s president, each own 1,180,329 shares of Lyft’s class A shares, about 0.05% of the 240,597,591 shares currently outstanding, but are expected to have voting control.<doc-sep>Ramin Talaie | Corbis News | Getty Images Not all IPOs are successful The earnestness to get into high-profile IPOs is often prompted by memories of other big-name companies that investors wish they had invested in, said certified financial planner Douglas Boneparth, president and founder of Bone Fide Wealth. Take Google, for example. The company's 2004 IPO raised more than $1.8 billion. What it also did was make many of its shareholders richer, particularly if they held on to their stock. "Generally speaking, [IPOs] don't do all that well," Boneparth said. "But people tend to think of the ones that have done really well. "You can point to many more unsuccessful IPOs than you can point to successful IPOs." If you do decide you want to invest, you should do your due diligence, Boneparth added. A company's Form S-1 filed with the SEC will disclose all of its financial details and the risks it identifies for its business going forward. "Ultimately, you want to know how the company makes its money, how it plans to continue making money [and] how it plans to grow its businesses or core business," Boneparth said. You should also take a look at your own balance sheet, including how much you can realistically afford to invest in the company and whether you will be willing to stay invested if the stock plummets, said Winnie Sun, founder of Sun Group Wealth Partners. "I like to do a wait-and-see before jumping into the holding," Sun said of a company's first couple of weeks of trading. "We let the stock kind of come to our price versus chasing the stock itself." Not the IPO market of 2000 Today's IPO market is different from that of 2000 — the height of the dot-com boom — in one notable way: the proliferation of exchange-traded funds since that time, according to Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA, an independent investment research firm. Of note, Renaissance Capital offers an IPO ETF, which adds companies of a certain size that list on the public markets. Companies are dropped from the ETF once they have been public for two years. "It's a way of getting diversified exposure to companies that become public," Rosenbluth said. While Renaissance is one of the few companies offering such an ETF strategy, that could change, according to Rosenbluth. "Perhaps as we see more companies becoming public, we'll see asset managers want to offer an ETF experience," he said.<doc-sep>Become an FT subscriber to read: Leverage our market expertise Expert insights, analysis and smart data help you cut through the noise to spot trends, risks and opportunities. Join over 300,000 Finance professionals who already subscribe to the FT.<doc-sep>Trump said electing Biden would crash the markets. It didn't WASHINGTON, DC - DECEMBER 12: U.S. President Donald Trump departs on the South Lawn of the White House, on December 12, 2020 in Washington, DC. Trump is traveling to the Army versus Navy Football Game at the United States Military Academy in West Point, NY. (Photo by Al Drago/Getty Images) A Tesla car charges at a Tesla Supercharger station on April 26, 2021 in Corte Madera, California. Tesla will report first quarter earnings today after the closing bell. (Photo by Justin Sullivan/Getty Images) An Amazon.com Inc. delivery driver carries boxes into a van outside of a distribution facility on February 2, 2021 in Hawthorne, California. Jeff Bezos said February 1, 2021, he would give up his role as chief executive of Amazon later this year as the tech and e-commerce giant reported a surge in profit and revenue in the holiday quarter. The announcement came as Amazon reported a blowout holiday quarter with profits more than doubling to $7.2 billion and revenue jumping 44 percent to $125.6 billion. (Photo by Patrick T. Fallon/AFP/Getty Images) This photograph taken on March 3, 2021 in Zurich shows a sign of Swiss banking giant UBS on their headquarters. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images) Warren Buffett, CEO of Berkshire Hathaway, attends the 2019 annual shareholders meeting in Omaha, Nebraska, May 3, 2019. (Photo by Johannes EISELE / AFP) (Photo credit should read JOHANNES EISELE/AFP via Getty Images) CEO at Verizon Media K. Guru Gowrappan appears at the 2019 Verizon Media NewFront on April 30, 2019 in New York City. IMAX CEO: Box office sales in Asia bode well for US theaters Economist: Work from home will be the future for a 'lucky minority' markets now future of work from home Indeed Chief Economist Jed Kolko_00005106.png This photograph taken on April 26, 2021 in Paris shows a physical imitation of the Bitcoin crypto currency. In this photo provided by the New York Stock Exchange, traders work around stock monitoring systems on the trading floor, Wednesday, May 12, 2021, in New York. Inflation worries rattled Wall Street on Wednesday, pulling the Dow Jones Industrial Average more than 680 points lower and placing the major stock indexes on track for their worst week in more than six months. (Courtney Crow/New York Stock Exchange via AP) A visual representation of the digital Cryptocurrency, Bitcoin on December 07, 2017 in London, England. Here's why used car prices are so high Why Lyft founder says there's nothing to admire about Uber FILE - In this Jan. 12, 2016 file photo, a ride share car displays Lyft and Uber stickers on its front windshield in downtown Los Angeles, Calif. Ride-hailing giants Uber and Lyft have launched subscription plans promising savings for trips to the gym, to work or around town. The ride-hailing companies stand to gain by increasing customer loyalty in a competitive market and securing more predictable revenue at a time when both companies are heading to an initial public offering. (AP Photo/Richard Vogel, File) Correction: An earlier version of this story misstated dates for Powell's testimony and Marriott's earnings (CNN Business) — 1. Looking under Lyft’s hood: Lyft appears to have beaten Uber in the race to become the first US ridesharing company to go public. The Lyft IPO, which could come next month, may serve as an icebreaker in the frozen IPO market. US offerings have plunged – largely as a result of the longest government shutdown in American history. Investors will soon get a look under Lyft’s hood. After submitting its IPO paperwork confidentially with the SEC late last year, Lyft is expected to make the filing public as soon as this week, The Wall Street Journal reported. The documents will give Wall Street a glimpse into whether Lyft is worth the $25 billion valuation it’s reportedly seeking. The key questions include how close Lyft is to achieving profitability, how fast the company is stealing market share from Uber and what risks these companies face. Lyft’s IPO filing will show how, unlike Uber, it’s squarely focused on the booming American ridesharing market. “Lyft is much more a bet on a pure-play US ride-sharing market,” said Asad Hussain, emerging tech analyst at PitchBook, a research firm that covers private capital markets. “It’s a cleaner growth story.” It’s true that Lyft has dipped its toes into bikes and scooters, including by acquiring bike-sharing operator Motivate. But Uber, the more mature company reportedly seeking a valuation of up to $120 billion, is spending heavily to expand into overseas markets and new areas like delivery (Uber Eats), shipping (Uber Freight) and micro mobility with services like the JUMP electric scooters. Uber’s strategy could pay off by making it a one-stop shop for all transportation needs. But it also poses risks and puts downward pressure on Uber’s margins. “Lyft is staying away from the untested markets like delivery and freight. That presents a much clearer growth story to investors,” said Hussain. Even though ordering an Uber has become commonplace for many Americans, ridesharing itself remains a relatively untested market. “We haven’t seen how it performs during a downturn. When you add all of these other things, it muddies the water,” said Hussain. Financial results released earlier this month show that Uber lost $1.8 billion in 2018, compared with a loss of $2.2 billion the year before. But the results also show that Uber’s revenue growth decelerated sharply as well. The Lyft IPO story doesn’t come with the baggage that has surrounded Uber. Over the past several years, Uber has been gripped by countless scandals including sexual harassment, alleged gender discrimination and a drawn-out boardroom battle with founder and co-CEO Travis Kalanick. For all of these reasons, Lyft is likely to garner a richer valuation than Uber. 2. Fourth-quarter GDP: On Thursday, the Bureau of Economic Analysis will release a long-awaited estimate for gross domestic product in the last quarter of 2018.<doc-sep>
Lyft publicly filed its S-1 on Friday to kick off the final sprint of the initial-public-offering process, which could see the ride-hailing startup go public as soon as April. Lyft will list on the Nasdaq under the ticker symbol LYFT, according to the S-1. The S-1 gives us our best look yet at the company's financials. It saw $2.2 billion in revenue in fiscal 2018, according to the filing. Lyft publicly filed its IPO registration on Friday, kicking off what could be a record-setting year for multibillion-dollar private tech companies hitting the public markets. Lyft didn't disclose in the filing what price it plans to list at in its initial public offering. The ride-hailing service was last valued at $15 billion in a 2018 funding round, though it is reportedly eyeing a valuation of between $20 billion and $25 billion when it goes public. Lyft will list on the Nasdaq under the ticker symbol LYFT, according to the S-1. The company is working with JPMorgan, Credit Suisse, and Jefferies as lead bankers on the IPO, expected in early April. Lyft plans to meet with prospective investors over two weeks in what's known as a roadshow starting March 18, according to multiple reports. After that, the timing of Lyft's IPO is up to its team and the performance of the market at large. The timing puts Lyft ahead of its ride-hailing rival Uber, which is expected to go public later this year in an IPO that could reportedly value the company at as much as $120 billion. Lyft's financials In its S-1, Lyft disclosed for the first time financials that shed light on its performance. The company saw $2.2 billion in revenue in fiscal 2018, up from $1.1 billion in the year-ago period. Like many tech unicorns, Lyft still isn't profitable. The company lost $911.3 million in 2018, up from losses of $688.3 million in 2017 and $682.8 million in 2016. The company also revealed its biggest shareholders. Outside of Lyft's executives and board of directors, the big winners when it goes public will be Rakuten, which owns 13% of the company; General Motors, which owns 8%; Fidelity, which owns 8%; Andreessen Horowitz, which owns 6%; and Alphabet, which owns 5%. Lyft also disclosed details of a new plan to put stock into the hands of its drivers, who did not previously receive equity in the company because of their status as contractors instead of full-time employees. The plan, first reported by The Wall Street Journal on Thursday, would give $1,000 to drivers who have logged 10,000 rides on Lyft's platform and $10,000 to drivers who've racked up 20,000 rides. It's up to the driver whether they keep the money or use it to buy shares at the company's IPO price. More from Lyft's IPO filing: