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Ride-sharing company and major Uber competitor Lyft might just be in a better financial situation than its better-known counterpart. According to a set of leaked documents, the San-Francisco based ride service saw record growth in the month of May and is on track to meet its annual goals.
The leak, originally reported by Business Insider, came in the form of an investor update detailing the privately-held company’s latest financial details. Through several rounds of funding, a number of investors, including General Motors (GM - Free Report) and Alibaba (BABA - Free Report) , have valued Lyft at around $5.5 billion.
The documents point to what appears to be a slightly more IPO-friendly financial situation at Lyft compared to its biggest competitor. The company is apparently expecting to beat its Q2 ride volume expectations by 35%, and it is coming off the back of a record-setting May in which total rides increased by 1.3 million month-over-month.
Lyft also had 2.8 million unique passengers in May, another new high and about 300,000 more than in the month of April. Also, the number of fully paid rides, those without a coupon or discount used, taken in May climbed by 5% from April. The company is currently on pace to have a total ride value of nearly $2 billion this year.
Most importantly, Lyft remains on track to not lose more than $600 million per year. This is in stark contrast to Uber, which is estimated to have lost about $2 billion in 2015. With even more growth this year, it’s not unwise to think that Uber might be bleeding even more cash in 2016.
Of course, Uber is a much larger company than Lyft right now. In fact, Uber operates in about twice as many cities, and one of the most expensive things in the business is expanding to new locations. Uber is pouring money into advertising and promotions, while Lyft seems to be getting over that hump.
At the end of the day, it’s the responsibility of every company to provide value for its shareholders. The pressure to do that increases by a hundredfold when you take the company public and potentially pick up millions of new owners.
Right now, Lyft appears closer to providing that value. While neither company is in the green yet, Lyft seems to be on the right track and is outpacing its own expectations.
Nevertheless, both companies should be concerned about the future of the ride-sharing industry. In fact, it might be a good idea for both Lyft and Uber to wait out this ever-changing regulatory period before planning an IPO.
At this point, the number of lawsuits and controversies surrounding ride-sharing brands continues to climb. Around the world, taxi drivers and passengers are protesting the business models of companies like Lyft and Uber due to pricing and safety concerns. These types of things take time to iron out.
Additionally, the IPO market has really cooled off this year due to a handful of global economic concerns. Uncertainty in emerging markets like China, as well as the developing “Brexit” could keep many companies away from an IPO in 2016.
Regardless, investors will want to keep an eye on Lyft and Uber. No one wants to be in the dark the day the IPO announcement finally comes.
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Could Lyft Be Ready to IPO Before Uber?
Could Lyft Be Ready to IPO Before Uber?
Ride-sharing company and major Uber competitor Lyft might just be in a better financial situation than its better-known counterpart. According to a set of leaked documents, the San-Francisco based ride service saw record growth in the month of May and is on track to meet its annual goals.
The leak, originally reported by Business Insider, came in the form of an investor update detailing the privately-held company’s latest financial details. Through several rounds of funding, a number of investors, including General Motors (GM - Free Report) and Alibaba (BABA - Free Report) , have valued Lyft at around $5.5 billion.
The documents point to what appears to be a slightly more IPO-friendly financial situation at Lyft compared to its biggest competitor. The company is apparently expecting to beat its Q2 ride volume expectations by 35%, and it is coming off the back of a record-setting May in which total rides increased by 1.3 million month-over-month.
(Also read: Will Uber Be the Hottest IPO of 2016?)
Lyft also had 2.8 million unique passengers in May, another new high and about 300,000 more than in the month of April. Also, the number of fully paid rides, those without a coupon or discount used, taken in May climbed by 5% from April. The company is currently on pace to have a total ride value of nearly $2 billion this year.
Most importantly, Lyft remains on track to not lose more than $600 million per year. This is in stark contrast to Uber, which is estimated to have lost about $2 billion in 2015. With even more growth this year, it’s not unwise to think that Uber might be bleeding even more cash in 2016.
Of course, Uber is a much larger company than Lyft right now. In fact, Uber operates in about twice as many cities, and one of the most expensive things in the business is expanding to new locations. Uber is pouring money into advertising and promotions, while Lyft seems to be getting over that hump.
At the end of the day, it’s the responsibility of every company to provide value for its shareholders. The pressure to do that increases by a hundredfold when you take the company public and potentially pick up millions of new owners.
Right now, Lyft appears closer to providing that value. While neither company is in the green yet, Lyft seems to be on the right track and is outpacing its own expectations.
Nevertheless, both companies should be concerned about the future of the ride-sharing industry. In fact, it might be a good idea for both Lyft and Uber to wait out this ever-changing regulatory period before planning an IPO.
At this point, the number of lawsuits and controversies surrounding ride-sharing brands continues to climb. Around the world, taxi drivers and passengers are protesting the business models of companies like Lyft and Uber due to pricing and safety concerns. These types of things take time to iron out.
Additionally, the IPO market has really cooled off this year due to a handful of global economic concerns. Uncertainty in emerging markets like China, as well as the developing “Brexit” could keep many companies away from an IPO in 2016.
Regardless, investors will want to keep an eye on Lyft and Uber. No one wants to be in the dark the day the IPO announcement finally comes.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>