2019 looks set to be the year the next generation of big tech goes public with competitor ride-hailing companies Uber and Lyft, set to be major players of the driverless car era, planning to go to IPO within months of each other. It’s been a few years since a big tech company, with the potential to become a huge tech company, went to IPO. There was Snap, owner of Snapchat, last year but that IPO and the company itself ranks more alongside the Twitters of the tech landscape than the FAANGs.
Surprisingly, and a little bit of tech investor trivia, the Twitter IPO was actually bigger than Google’s and at the time the second biggest tech IPO ever after only Facebook. But that can be considered more a sign of the times than the relative scale of Twitter as a company at the time. The share price performance since Twitter’s IPO is testament to that and there doesn’t appear to be any serious prospect of Twitter developing into one of the major tech conglomerates. The last really big tech IPO was probably Alibaba back in 2014, then the biggest IPO of all time.
2019, will change that as companies which do have the potential to fire themselves into the upper echelons of the world’s most influential and valuable companies, go public. Airbnb, the crowd sourced travel accommodation platform has captured the imagination and now Lyft has signalled its intent, with an IPO reportedly being targeted for as early as March or April, by hiring IPO advisory firm Class V. JPMorgan and Credit Suisse are also said to both be tendering for the role of lead underwriter.
While Uber has not formally pulled the trigger on its own IPO process, chief executive Dara Khosrowshahi was hired last year with the mandate to take the company public and expectations are the IPO will be at some point in the second half of 2019. There is a high chance it will take place around this time, 12 months from now, in late September or October. Goldman Sachs and Morgan Stanley are favourites to underwrite that IPO due to existing relationships.
The fact that both Lyft and Uber will very likely both go to IPO next year will deepen the competitive rivalry between two companies that until now have offered different versions of what is essentially the same core product – ride hailing apps based on the gig economy. Uber is the larger of the two companies at the moment, having expanded internationally at a faster pace as well as branching out into food delivery and cargo through Uber Freight. In June Lyft was valued at $15 billion when it raised a $600 million investment round and Uber’s recent investment from Toyota valued it at $76 billion.
Despite the fact that Lyft and Uber will be competing for roughly the same pool of investors, analysts believe that the success of 2018 U.S. exchange-listed IPOs, up an average of 26% and 50% across tech companies, will mean there is appetite for both. With the size of the self-driving taxi hailing sector predicted to be huge, both companies, which are also focused on developing self-driving technology, have the potential to figure among the biggest tech stocks in the world if they capitalise on developments.
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