Watching the Lyft IPO and its effect on the market has been fascinating. It was the first ride-hailing app to go public, which it did in late March. Initially, everything looked great. The company had ambitiously priced its IPO at $72 per share. Right after the launch, shares soared to $87.24. This meant that the company’s valuation was nearly $30 billion, a surprisingly huge amount.
However, in just the short weeks since that launch, Lyft’s value has dropped considerably. In fact, the drop happened fast. Shares fell below IPO price by the second day of trading. By April 15th, they were down to just $56.57 per share. That’s a 27% decline from the close of the first day of trading. Moreover, it’s 35% below that opening price of $87.24. Watching this saga has everyone curious about what’s going to happen with all of the other big IPOs set to happen in 2019. In particular, market analysts can’t stop making predictions about Uber.
What Will Happen When Uber Goes Public?
Lyft beat competitor Uber to the public offering. However, Uber is poised for its launch. People everywhere are speculating on what will happen with Uber’s IPO. Moreover, there are diverse opinions about how Uber’s launch will affect Lyft’s value. Uber is a bigger company with about five times the revenue of Lyft. It’s expected to open to the public at about that same ratio, with a valuation of around $100 billion or about $95 per share.
Most market analysts seem to expect Uber to follow a similar trajectory, starting off really strong but then fading quickly in terms of value share. However, some analysts are already coming out to say that Uber isn’t worth nearly as much as that projected launch number. CNBC reports that valuation expert Aswath Damodaran values the company at somewhere between $58 and $62 billion or between $51 and $54 per share. Moreover, initial investors may be more cautious after seeing the early days of Lyft’s IPO.
Uber has a lot working against the company. They continue to face a variety of legal battles. Recently several women have come forward with frightening tales of sexual harassment/ assault from their drivers. Moreover, they’ve reported that the only help the rideshare has given them is a $5 credit for the “trouble.” Uber tried hard to turn its image around with its new CEO, but it’s just not working quite as expected. Moreover, in addition to the legal troubles, Uber still isn’t a profitable company.
What Will Happen to Lyft with Uber IPO?
Lyft is a smaller company. It tends to have a better reputation than Uber, although it’s had its problems over time. The company recently had to pull many of its electric bikes out of service after reports of potential brake problems. That said, it’ll be interesting to see the effect that Uber’s IPO has on Lyft shares. Some people say that Lyft’s stocks may improve once Uber launches.
It really depends on what Lyft does shortly and how the public perceives its changes. They’re expected to launch their version of Uber Eats, which could increase their value considerably. Likewise, they’re making headway with driverless cars, which may or may not lead to improved profitability in the future. It’s hard to say which company will dominate the industry in the years to come, even though Uber is the bigger company at this time. Therefore, if you have shares in Lyft, you just might want to hang on to them.
More IPOs to Watch for in 2019
Lyft and Uber drew a lot of attention for their public offerings this year. After all, they were in a race to go public first. They’re natural competitors in a market where no other similar competitors really exist, let alone have gone public. Therefore, all eyes have been on them. However, there are a lot of other big IPOs to watch for this year. Although, with Lyft’s IPO struggles, along with other changes in the marketplace, there has been a delay of many of the IPOs anticipated for the year.
Will Airbnb Go Public?
In the frenzy of news about big companies going public in 2019, Airbnb was on everyone’s radar. However, as we have gotten a little bit further into the year, it’s become increasingly unclear whether or not they’ll have a 2019 IPO after all. Recode points out that the company hasn’t gotten any investment money in more than two years, which is a long time for a Silicon Valley startup. Therefore, interested investors have to carefully eye everything they can find out about the company’s financials.
Airbnb recently sold common stock at a price that would value the company at about $35 billion. However, the share value is unclear if they go public. Forbes reports that Wealthfront CEO Andy Rachleff accepts a current market valuation of $31 billion for Airbnb. Nasdaq reports that Airbnb has made some key acquisitions in the buildup to their IPO. Nevertheless, the company says that while they may go public before year’s end, it doesn’t necessarily mean that they will do so. Therefore, this remains one to keep an eye on.
Slack Will Go Public with a Direct Listing of Shares
If you work in the Bay Area, you’ve almost certainly used Slack to communicate with coworkers. Of course, people use it elsewhere as well, but it’s become particularly popular in the Bay Area. Email is out. Slack is in. So it’s no surprise that the company plans to go public.
Slack isn’t planning the usual IPO though. Instead, they plan to directly list their shares on the New York Stock Exchange. It’s not a common approach for startups going public. However, Spotify successfully used this approach when they went public. Most likely, Slack will go public this summer.
Bloomberg reports that in advance of that, investors are betting big on Slack’s value. During the company’s last fundraising round in August, the company had a value of approximately $7 billion. Investors are currently paying between $24 and $27 per share, which places valuation closer to $16 billion. Notably, high prices like that don’t always translate to a high value when the company goes public. Again, this will be an interesting one to watch.
Pinterest Manages IPO Expectations
Pinterest is a popular company. In certain niches, if you don’t have a Pinterest account, then you can’t effectively market your business. However, The New York Times reports that the company is working to manage expectations in advance of going public. Pinterest conservatively priced shares at $15 – $17. This gives the company a valuation of around $11 billion.
High Hopes for Palantir IPO
Peter Thiel is no stranger to making money from startups. His data mining company Palantir is no exception. Although it’s not as flashy as Airbnb or Uber in the public’s mind, it just might be the best IPO to invest in this year. For one thing, the company just won one of its biggest contracts ever, beating out Raytheon for an $800 million military contract. The company works with at least 12 differentl government agencies, which bodes well for its continuing value.
Palantir is frequently listed with a valuation of $20 billion. However, that amount is from a 2015 funding round. It’s no small valuation, but Bloomberg reports that it could be less than half of the company’s actual valuation. That $41 billion valuation came even before the news about that huge military contract.
Other IPOs to Keep an Eye on in 2019
Uber, Airbnb, Slack, Pinterest, and Palantir are the companies you’ll definitely want to keep an eye on as they go public. However, you might also want to follow IPO news about:
- PagerDuty and Zoom are both going public before Easter.
- Stock-trading app Robinhood is looking good for a 2019 IPO.
- Postmates has increased marketing efforts in advance of a likely IPO.
- Beyond Meat is likely to be the first plant-based “meat” maker to go public.
- Dating app Bumble hopes to get an edge up on competitor Tinder by going public but has not set an IPO date.
- Cloudfire was expected to go public this year, but a new round of funding may push that back.
- WeWork was a highly anticipated 2019 IPO, but a big drop in value may delay them from going public.