US ride-hailing company Lyft finally went public, Friday, March 29.
The company raised $2.3 billion from its IPO, ending the its first day of trading with a market valuation of $22.2 billion, CNBC reported.
Lyft has become the first ride-hailing company to be publicly traded, which Recode reporter Theodore Schleifer said is an advantage for Lyft, gaining attention and attract early investors.
“If you’re an institutional investor who is eager — after years of watching two meteoric privately held startups amass value — to get exposure to U.S. ride-hailing, there will be a few months during which you will have one option and one option only: Lyft,” Schleifer wrote.
Lyft, as opposed to world-spanning Uber, is only available in US and Canada, and doesn’t have other services besides ride-hailing.
Lyft likely won’t be the last tech company to IPO this year though. There’s Uber of course, accommodation-sharing service Airbnb, visual discovery engine Pinterest, cloud-based video conference platform Zoom and a couple of other tech “unicorns” valued at more than $1 billion set go public in what reports have described as a big year for tech IPOs.
We’re taking a look at what this could mean for each company below.
While Lyft is only estimated to be worth $20 to $25 billion when it goes public, Uber is estimated at $120 billion.
Uber in February reported an $842 million loss in the fourth quarter of last year, which is 88% higher than that of the year earlier.
These losses reportedly stem from the company’s push to dominate the ride-hailing space by attracting both riders and drivers with more incentives.
Despite this, investment bankers still believe it would be one of the biggest-ever public offerings from the tech sector. It’s expected to be worth as much as $120 billion when it becomes publicly traded sometime in the first quarter, as sources claim.
This begs the question: Why would investors want to buy stocks of an unprofitable company?
According to The New York Times, tech companies are rarely profitable before they become public.
This is mostly because they have to increase their spendings in research and development of new products and innovations to grow even bigger in the future.
By becoming a publicly traded company, Uber can quickly get the money it needs for its growth.
This growth is said to come in the form of AI-powered self-driving cars and electric scooters.
“They are moving from a business model innovation company to a product innovation one through autonomous vehicles and AI,” Matt Pencek, the director of consulting firm MorganFranklin told Vox. “It’s hard for a company to switch their business model, and so going public will provide liquidity.”
While it’s too early to tell what consumers can expect from Uber’s IPO, it’s highly likely that we’ll hear and see more of their self-driving cars in the near future, especially since Uber recently resumed its testing program for these cars.
Uber CEO Dara Khosrowshahi is also likely continue to pour money into the expansion of the company’s food delivery service Uber Eats in more territories as the company plans to deliver $10 billion worth of food worldwide this year.
After years of toying with the idea of whether to go public or not, Airbnb is finally ready to hit Wall Street this year.
The company might reportedly be valued at $31 billion when it becomes traded. Though, unlike the two aforementioned companies, Airbnb is in no rush to get money as travel industry news site Skift, who cites Rented.com CEO Andrew McConnell, claims that the company currently has an estimated $3 billion in cash.
This is likely true as Airbnb has in the last few years acquired numerous companies to expand its offerings. The most recent of which is HotelTonight, a mobile app that lets users book their stays last minute.
The company has already rapidly grown since it launched in 2008, but it’s expected to grow even further when it goes public.
Skift adds that the company is set to offer more experiences to its users as CEO Brian Chesky in numerous occasions teased. These could include Airbnb Lux, a luxury division of the service and the rumored Airbnb Flights, a part of the service that books flights.
What’s certain for consumers is that more options for booking will be available to them as the company continues to acquire partners and continue expansion.
Pinterest last week announced that it has filed its S-1 – one of the main documents for going public – for its IPO expected on April, as reported by TechCrunch.
Currently valued at an estimated $12 billion, the online image search would be listed in the New York Stock Exchange with the ticker PINS.
The company posted revenues of $755.9 million in 2018, up 60% from 2017’s $472.8 million, but is still not profitable, according to Chris Neiger from The Motley Fool as it’s expenses for web hosting services, app costs, and salaries among others increased from $178.6 million in 2017 to $241.5 million last year.
Though, the increase in revenue helped Pinterest narrow its losses from $130 million in 2017 to $63 million in 2018.
The company’s monthly active users also saw some growth having hit 265 million in the fourth quarter of last year.
While its user numbers are still far from Facebook’s 2.3 billion, Pinterest cites a research from Cowen and Company that claims more people use the platform to find or shop products than on other social networks.
Pinterest would likely use this data and the money it raises in its public offering to attract more advertisers to its platform.
Unlike most other companies on this list, workplace communication service Slack chose to go with a direct public offering (DPO), instead of an IPO.
This is a process by which the company eliminates the need to hire underwriters – institutions that provide insurance to financial risks involved in trading – in favor of letting the people who own shares sell them directly to the public, as explained by Fortune.
The Motley Fool, who cited The Wall Street Journal, points out that Slack has the cash it needs, which means it does not need to raise capital through an IPO. Besides this, it could save Slack some money to cut out the IPO middleman as well as avoid a lock-up period.
The company could go public sometime within the first half of this year with a potential valuation of $7 billion.
US-based delivery service Postmates filed confidentially for their IPO earlier in the year, joining Uber and Lyft as ride-hailing companies to debut in the stock market in 2019.
Business Insider reports that the company’s most recent venture capital funding round last January gave it a valuation of $1.85 billion. The company’s other financial figures, however, are not known.
Postmates reportedly comes in at fourth with regards to its 10% market share, falling behind Grubhub at first with over 50%, UberEats at second with 21%, and DoorDash at third with 15%.
Despite this, the company is said to have shown amazing growth in the past few years, now covering around 400 cities in the US.
The company in early 2018 also partnered with automaker Ford to experiment with self-driving vehicles in the on-demand delivery space. Capital from an IPO could help Postmates continue to work with this tech and possibly use it to power their service in the future.
Rounding out the list is cloud-based video conference software Zoom, who made their S-1 public last week.
The company is said to be considered profitable as it has already made $7.5 million in profits from its $330.5 million total revenue for the fiscal year that ended in January 31.
In their filing, they attributed this success to their video conference platform simply working as it should.
According to Quartz, there are often software and hardware incompatibilities when it comes to video conferencing that make it hard for users to use these types of platforms.
Zoom, however, is different as it was built as a video conference platform from the very beginning instead of just being added to traditional conference calls. The company also said that their cloud infrastructure makes the process more seamless.
Zoom will trade under the ticker ZM and hopes to raise $100 million. – Rappler.com