This article has been updated to reflect the completion of Lyft’s initial public offering.
It’s happening. Shares of Lyft, the first big initial public offering of the gig economy era, started trading on Friday. The company priced its shares at $72, and they quickly jumped as high as $87.24. By market’s close, the stock had retreated to $78.29—still a gain of 8.7 percent from the IPO price. That gives Lyft a $26.4 billion market cap, larger than many legacy transportation companies, including United and American Airlines, Hertz, and Avis.
On one hand, the market’s enthusiasm for the Lyft IPO (which was reportedly oversubscribed) is good tidings for a spate of other tech IPOs on the horizon, including Uber, Airbnb, and Pinterest. Uber, Lyft’s main rival, was last valued in an August 2018 private financing round at $76 billion, and it might seek a $120 billion valuation when it files for IPO. The larger ride-hailing company has reportedly filed its initial paperwork to go public.
Yet neither of the two big ride-hailing companies has publicly outlined a path toward profitability. Lyft’s initial filing with the US Securities and Exchange Commission, in early March, tells a nuanced story about the company, which is pulling in plenty of money but struggles to stem its losses.
Lyft’s ridership has grown dramatically in the past two years, from 6.6 million at the end of 2016 to 18.6 million at the end of 2018. Lyft estimates that 9 percent of the US adult population has taken a Lyft ride. It also says its year-over-year increase in riders hit 47 percent in December. That’s a lot of growth.
Lyft is also giving more rides than ever, jumping from 52.6 million at the end of 2016 to 178.4 million at the end of 2018.
And the company doubled its revenue in 2018, to $2.2 billion, from $1.1 billion a year earlier.
Lyft seems to believe that it can attribute at least some of its last three years’ of growth to one big thing: Uber’s branding cock-ups. In the filing, the company writes it got a big boost in revenue per active user in the first and second quarters of 2017 because “our brand and values continued to resonate with riders and they increased their usage of Lyft instead of competing offerings.” Remember the #DeleteUber movement in the weeks following the Trump administration’s travel ban, and the blog post from engineer Susan Fowler that cast a spotlight on Uber’s sexist culture? Lyft appears to believe those helped its bottom line.
But Lyft’s costs and expenses are growing, too. Last year, for example, the company spent $804 million—nearly twice what it did in 2016—on sales and marketing to new riders and drivers.
As a result, Lyft’s losses are widening, reaching $911 million last year. Uber self-reported an adjusted loss of $1.8 billion in the same period. The companies’ dueling IPOs mean everyone will be watching as they try to turn it around.