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Lift IPO: Ridesharing startup describes all the reasons why it could fail




Lyft is due to being the first huge technology start to record its shares on the stock market this year – and it has eliminated all roadblocks that could track not only its own business, but the ridesharing industry itself. (Patrick T. Fallon / Bloomberg)

Lift is due to be the first huge technology start to record its shares on the stock market this year – and it has put all the roadblocks that could track not only its own business but the ridesharing industry itself.

From dockless scooters and bicycles to self-propelled cars, any number of modes that Lyft has put on, could offset the busy business that it helped pioneer, according to documents that Lyft was filed as part of its IPO process. To the extent that Lift relies on drivers, they are also a source of risk to the business as well as potential regulation due to concerns over increasingly crowded streets and constraints.

Analysts said it was among the most honest judgments yet of the challenges facing the riding industry that has historically dealt with as few as possible in its pursuit of the transport market, instead of thousands of independent " driver entrepreneurs "to support their business. The risks that are mandatory for companies to get detailed as part of a stock exchange listing are some sort of worst case scenario for the company.

IPO for Lifting and Competitor Uber's expected listing later this year – is a turning point for one of the most popular innovations to get out of Silicon Valley in recent years. The discount, the door-to-door riding company replaced the taxi industry, aggravating city regulators in the process and ushering in a new class of workers during the business cycle. But many see the demand car and the driver model as a step towards a wider revolution in transport as a result of driverless technology.

Lyft and Uber have both put their efforts into a driverless future and are leaning millions on research and development for autonomous systems that may be less costly than splitting ticket prices with drivers. But they also compete with other Silicon Valley giants, such as Waymo, which belongs to Google's parent company and Detroit-based automakers, the first to launch autonomous riding stalls services.

And there is plenty of competition right in the driveway. In addition to Uber, it competes with less popular services such as Gett and Via. Many other riding holes like Split and Sidecar have already flared out, and on-demand commuter buses like Chariot and Bridj floundered after failing to attract a sustainable market.

Questions about the future of the riding model It is only about driverless technology: scooters, bicycles and mobility investments in cities. Lifting can also pose a threat to the company's business. Recently lifted millions in its acquisition of Motivate, becoming the country's largest bikeshare operator, in a deal that was considered valued at about $ 250 million.

In his enlightenment, the lift called the bikes and scooters "new and unconscious" and said "It is uncertain whether the demand for bicycle and scooter sharing will continue to grow and gain broad market acceptance."

Uber made a similar move to urban mobility last year, buying e-bike start JUMP in an almost $ 200 million deal, according to TechCrunch. Dockless scooter companies Bird and Lime have taken cities by storm in the past year, and Uber and Alphabet both invested in Lime. Automaker Ford made its own push in the fun-filled scooter market by buying Spin late last year.

Lifting goes public at a time when it has a relatively strong market position on the heels of the # DeleteUber movement, which flocked hundreds of thousands of riders instead of what they saw as a friendlier and more socially conscious alternative. It aims to increase 2.1 billion. Dollars in the coming weeks, giving a potential value of over $ 20 billion New reports have said that Uber is looking for a $ 120 billion valuation. (Uber declined to comment.) Both companies lose money on every trip they make.

Lifting can never be a profitable company, the company said in information that is mandatory in the IPO process. Last year, it lost $ 911 million in revenue of $ 2.2 billion. $.

"We have a history of net loss and we may not be able to achieve or maintain profitability in the future." Lift out described in a mandatory Securities and Exchange Commission document before launching its IPO "road show" this month, where it will provide the company with investors.

"Here, as with Uber and AirBnB, you have a money-absorbing business that is growing fast, but potentially can be worth huge money in the future," says University of Florida Finance Professor Jay Ritter, who specializes in IPO & # 39 ;is. "It makes it incredibly difficult to come up with an objective evaluation of the company because you have to make so many assumptions about things that are just intrinsically difficult to quantify."

In the brief, Lyft outlined 70 potential disadvantages for investors in connection with his business and the riding market, asking for uncertainty against one of the most anticipated public offers this year. Perhaps the rapid expansion for bicycles and scooters can come back on fire if these modes do not create a sustainable market, creating business growth. Or self-driving cars can't take off as expected.

A court decision can force Lyft to classify drivers as employees instead of independent contractors. There are also concerns about whether Lyft could maintain the huge number of drivers needed to provide rides at an icon and whether city regulators would continue to surrender increasingly crowded streets and slow down space for an investor-funded Silicon Valley tech powerhouse in its pursuit of profitability.

"Given the quiet period, we do not fall to comment," said lift spokeswoman Alexandra LaManna, who referred to the companies' typically tight run-up to an IPO.

However, some warned against reading too much into the risks Lyft revealed in front of his rival as a result of his decision to go public before Uber.

There were some positive news stored in Lyft's information. Its revenues and marketer both had jumped significantly in the wake of Uber's repeated PR disasters, culminating in the departure of the riding giant's founder and CEO Travis Kalanick. Lift said its market share was nearly 40 percent in December, almost doubling its share two years earlier. In the meantime, revenue has jumped more than six times from $ 343 million in 2016 to $ 2.2 billion in 2018, although annual losses also increased by over $ 200 million during that period.

Santosh Rao, research director of Manhattan Venture Partners, said such revelations are routine for large corporations ahead of their public offerings, and said getting up to the level of an "existential" threat. He looked like the information on the warnings on a Tylenol brand.

"You shouldn't take it easy, but if you balance it with the reward, the risk amount is quite balanced," he said. "The risks are there, but I think the rewards are much better," said Rao, whose company includes lifting one of the funds it manages.

But Ritter says it's not likely a case that the potential lack of profitability is so prominent. The information highlights the many uncertainties surrounding the business model, which are at least unconscious.

"You certainly know it's a very big risk," he said. "There is no guarantee that Lift will not collapse."

The ride-hailing model requires some sort of suspension of disbelief, analysts say. Not only will investors accept that Lyft is able to maintain drivers and riders – and growth in both segments – but also that it will knock out or remain competitive with Uber. Finally, it requires a conviction that regulators will not step in if the lift is tied to road load or negative consequences for the cities, and the autonomous future that it emits will really work.

"Endgame you have to believe is so unhelpful in my heart – it is definitely the end of the unicorns," said Nicholas Farhi, a partner of OC & C strategy consultants, focusing on ride-hailing apps. "It's hard for me to think of a rational reason why people would invest in this."


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