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Ridesharing giant Lyft (NASDAQ:LYFT) is going public this week at an estimated valuation of at least $20 billion. This is just weeks before the anticipated IPO of larger competitor Uber, which is valued at around $120 billion. Palantir ($41 billion valuation), Airbnb ($31 billion valuation) and Pinterest ($12 billion valuation) are also among a crowded group of potential 2019 mega-IPOs, and investors are trying to understand what to make of the newest Silicon Valley giants to take Wall Street by storm.
Recode editor-at-large Kara Swisher discussed Uber, Lyft and Pinterest on CNBC this week. Both Uber and Lyft are extremely popular companies with plenty of brand value, but both reported massive losses in 2018 and have yet to prove they have viable long-term business models.
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“These S-1s from Lyft and Uber are tough,” said Swisher. “They’re tough going from a financial point of view.”
Unproven Models
Swisher said Uber and Lyft will likely see most of their early successes in densely populated cities. However, just because the economics of operating in rural areas doesn’t work today doesn’t mean they won’t figure it out eventually. Swisher said plenty of people questioned Amazon.com, Inc. (NASDAQ:AMZN) and its early delivery business model as well.
She also said the global ridesharing industry could consolidate over time, and more legacy automakers will be looking toward Silicon Valley for partnerships and acquisitions. Swisher gave Tesla, Inc (NASDAQ:TSLA) credit for spooking the auto industry into innovating.
“Whatever you think about what’s going on at Tesla and with Elon Musk, he has shifted the discussion really significantly in that regard,” she said.
Swisher will be moderating multiple sessions on technological innovation and venture capital at the upcoming SALT Conference in Las Vegas starting on May 7.
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Pinterest’s Unique Approach
Pinterest’s S-1 filing set the company apart from many of its growth-at-any-cost peers. Revenue was up 56 percent in 2018, but earnings losses actually narrowed by more than 50 percent. Swisher said Pinterest CEO Ben Silbermann is not the typical Silicon Valley CEO.
“He’s a very interesting CEO, and I sometimes joke that he doesn’t even want to be a CEO,” she said. “They want to be able to get to good profits in a much calmer way, but at the same time they want to go public.”
However, Swisher was less fulsome on the share classes implemented by companies like Lyft and Pinterest, which give company insiders 20 votes each for their shares while public investors get only one vote per share.
“I think the idea of people holding onto [controlling interest] is for the safety of that company because when it goes out with these numbers it’s going to be problematic,” Swisher said. “I think they’ve watched other IPOs and are responding to that.”
Despite the risks involved in these high-profile tech IPOs, there certainly seems to be plenty of market demand for shares. Reuters reported that the Lyft IPO was already oversubscribed on day two of the company’s investor roadshow.
Related Links:
Uber IPO Roadshow Set For Next Month
Considering High-Profile IPOs: How Do These Stocks Trade The Day After Their First Earnings Report?
Photo Credit: Loic Le Meur via Flickr
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.