Some good news today for those investing online and with an eye on exciting IPOs coming up in 2019. Ride-hailing app Lyft has filed the key documents which announce its intention to float publically in a multi-billion IPO in spring next year. 2019 IPOs have been anticipated for both Lyft and its bigger rival Uber and it was thought that the latter would be first to market. However, Lyft has now pulled ahead.
In one sense a taxi-hailing app may not sound like a tech company set to bestride the world in the same way as Amazon, Google or Apple. However, Amazon also didn’t when it made its stock exchange debut as an online bookseller making its first forays into wider ecommerce. It’s now the second biggest company in the world and expected to overtake Apple as the biggest at some point during 2019. Amazon seems set to dominate an increasing array of commerce verticals both online and offline and is also one of the major players in modern media through its Amazon Prime content streaming unit as well as the huge and quickly growing cloud computing sector through Amazon Web Service (AWS).
There is of course no guarantee Lyft, Uber or any of the rest of the new generation of tech darlings such as Airbnb will grow in the same way Amazon made such good use of capital markets to achieve. However, canny investors eyeing the Lyft and Uber IPOs would do well to spot the fact that there are parallels. Lyft and Uber’s long term ambitions are not as ride-hailing apps but as much broader transport technology platforms that might one day resemble the dominance that Amazon has achieved in ecommerce. The digital taxi gig economy is in many ways just a gateway.
Within a decade many believe that the emergence of driverless vehicles will render the economic argument for privately owning a car obsolete. No human drivers on the roads or other transport networks is a realistic possibility within 20 years. Investing in the Lyft IPO, or the Uber IPO which will surely quickly follow, is not an investment in a ride-hailing app that conveniently calls gig-economy taxis manned by human drivers. It’s an investment in a future driverless economy in which autonomous vehicle-enabled transport has become a service.
Lyft and Uber’s ambition is to be major players in the Transport as a Service (TaaS) space, controlling the huge fleets of driverless cars that many believe we will all have subscriptions for in place of our own car in the driveway or garage. Delivery, freight and any other sector that currently relies on transport, and drivers, are also in sight. The intended trajectory is clear. The question is whether Lyft or Uber will be as successful in realising their wider ambitions to capitalise on a new technology culture as Amazon was 20 years earlier.
Lyft’s 2019 IPO is expected to take place in either March or April but there are not yet any details on its price target, how many shares the company will sell and if there will be a retail offer. The company was valued at $15 billion during its last investment raise in June but is still loss making. The same can be said for Uber with both companies focused on expansion rather than profit. It will test the market’s continued appetite for fast growth, loss making tech companies under conditions which have recently made investors more sceptical.
Big tech and auto industry players clearly see future potential for Lyft. General Motors invested $500 million in the company in January 2016 and Alphabet, Google’s holding company, $1 billion last autumn. Those investing online and interested in the Lyft and Uber IPOs should certainly look at any investment as a long term gambit. Market volatility and the fact both companies are still loss making is likely to mean any market downturn over the next couple of years, something which many analysts believe is inevitable, would hurt publically listed shares in the companies. The prospect of big returns is a bet on the progress of a driverless economy a decade to two from now and how Lyft and Uber are in carving out their place in it.