Two of the biggest IPO offerings for emerging tech companies are Lyft and Uber. Which is the best bet as an investment opportunity?
Lyft is expected to hit a valuation of between $20 billion and $25 billion, according to Reuters, with a roadshow to pitch investors likely to come in mid-March.
Sources told Reuters that Uber is likely to need more time to prep its IPO campaign.
As the countdowns continue, Asad Hussain, emerging tech analyst at PitchBook, sees plenty of differences in each company.
Lyft
“As Lyft and Uber prepare to IPO, we believe the two companies present two fundamentally different investment propositions—with the former representing an investment into the US ridesharing industry, and the latter representing an investment into a global, bundled, Mobility-as-a-Service platform,” he explains.
“Although we recognize the growth potential for Uber’s business, we remain more confident in Lyft given its more focused business model.”
Why?
A matter of focus, he says.
“We believe Lyft chose to list ahead of Uber so as not to be burdened by the dominant ridesharing player’s likely lower valuation multiple and associated scrutiny surrounding its slowing growth profile, numerous corporate controversies, and somewhat unfocused future growth strategies.
“Unlike Uber, Lyft is focused primarily on the US ridesharing market, and presents a much cleaner growth story to investors wary of Uber’s forays into lower-margin international markets and other untested markets such as food delivery.
“Moreover, while Uber’s core ridesharing bookings growth is slowing, Lyft’s revenue growth is robust, helping the company recently achieve 40% market share in the US, up from 35% last year (to the detriment of Uber).”
So his conclusion?
“Overall, we believe that Lyft could present a more compelling opportunity for public equity investors interested in investing in the US ridesharing market.”
Next week, Asad will be releasing a report with more details.
