Eat the IPO – the race is on for Uber and Lyft to go public

By Jonathan Jackson. Published at Dec 11, 2018, in Start Your Engines

Uber crashed today. Fortunately, no drivers had any reported bingles — they just failed to show up.

The outage was experienced internationally and lasted for approximately three hours with users in Australia, US, Canada, Europe, New Zealand and India all affected.

It left people stranded, as passengers were unable to book cars and were charged for trips they never took.

Drivers were unable to collect payment for their trips or see where their pick-ups were located.

More shockingly, meals never turned up. That’s enough to make anybody hangry!

Imagine how angry the Uber Eats addict who missed out on their Mexican would be. This is fact: someone in Australia ordered Uber Eats 658 times this year — nearly twice a day!

It’s not a great time for Uber to crash, especially as it is in a race with fellow start-up Lyft to IPO.

Both companies filed paperwork with the Securities and Exchange Commission last week and could IPO as early as Q1 2019, but Uber’s business model could soon be exposed to the scrutiny of public markets, and considering the company seems to burn through cash at a rate of knots, this may not work in its favour.

Uber brought in US$2.8 billion in revenue in the second quarter of 2018, but ultimately lost US$891 million thanks to increased spending, according to Bloomberg.

In 2017, Uber lost US$4.5 billion. Since launching in 2009, the company has burned through US$11 billion. Working in its favour is the US$7.3 billion cash on hand.

Uber CEO, Dara Khosrowshahi, believes the company’s profit/loss scenario is reflective of its “growth above profit” ethos. However, as reported by The Information, Uber's self-driving car operation is said to be losing as much as US$200 million a quarter, and Bloomberg claims that Uber is being urged by investors to offload the unit.

On a positive note, diversity could strengthen Uber’s IPO appeal as it acquired dockless bike-share company Jump and is preparing to launch its own electric scooter sharing service as well.

Much to Uber’s chagrin, Lyft will do the same - scooter sharing anybody?

Lyft has hired JP Morgan to assist with its IPO and is expected to be valued at more than US$15 billion in the public market, compared to Uber’s US$120 billion suggested by banks.

According to reports by CNBC, Lyft raised US$600 million in Series I funding earlier this year, giving it a value of US$15.1 billion. Credit Suisse and Jefferies are also involved as underwriters in a more junior capacity.

Moreover, The Wall St Journal reported that Lyft's third-quarter losses, which are not public, grew to US$254 million from US$195 million a year earlier. Still, revenue rose to US$563 million from US$300 million over the same period.

Working in Lyft’s favour is the round of scandals Uber endured under the leadership of former CEO, Travis Kalanick. You can read about them in the Business Insider article, '40 of the biggest scandals in Uber's history'. They include sexual harassment and a cybersecurity cover-up and don’t make for pretty reading.

Also working in Lyft’s favour is that it is likely to IPO before Uber.

Who will win this heavyweight ride sharing battle remains to be seen. There are pros and cons on both sides. Right now, Uber’s diversity may give it an edge — it just needs to pick up its passengers on time and continue to deliver food to hangry people who use Uber Eats twice a day.

Order, eat and be merry – the stats that matter

How Aussies ate in 2018, according to the Uber Eats app:

  • Aussies had their eyes on summer bodies — searches for “healthy” options on the Uber Eats app increased significantly — by 149% — from June to October this year
  • There was a 75% increase in searches on the app for vegetarian meal options from June to November
  • But there was a 283% increase in searches on the app for plant-based meal options from August to September
  • Aussies went matcha-mad, with a 206% increase in orders of the beverage from June to November this year
  • Healthy orders such as salad, sushi and sandwiches have skyrocketed over the last year, making up 14% of lunch time searches on the Uber Eats app
  • Aussies upped the ante on the luxurious food front in 2018, with a 20% increase in sashimi orders and a 36% increase in truffle orders from June to November
  • Aussies ordered more than 4.7 million burritos this year and devoured more than 83 million McDonald’s McNuggets
  • Everyone loves nuggets, but which city loves them the most?
  • Sydney comes out on top, gobbling up more than 25 million nuggets this year
  • Followed closely by Melbourne, then Perth
  • Hot chips took away the title of ‘most popular menu item’ on Uber Eats for the second year running
  • Someone in Australia ordered Uber Eats 658 times this year — nearly twice a day!
  • The number one post-midnight item ordered on Uber Eats across the country was the humble cheeseburger
  • One hungry Melburnian ordered $914.25 worth of Domino’s in one go!
  • Australia’s most adventurous eater ordered from 178 different restaurants this year
  • Mexican is Australia’s number one trending cuisine, based on Uber Eats data from the last three months

How Aussies travelled in 2018, according to the Uber app:

  • Australian riders used Uber across 78 of the 79 countries in which it operates globally
  • No-one from Australia has used Uber in Paraguay this year (yet)
  • The top three countries Aussies are using Uber in overseas are the US, UK and France
  • Love actually is all around — Australia’s most complimentary rider hails from Brisbane and gave out 741 compliments to drivers throughout the year
  • During Mardi Gras, Uber facilitated more than 210,000 trips — now, that’s a lot of glitter!
  • Since launching Uber Pool in April this year, riders across Sydney and Melbourne have shared nearly 3 million kilometers
  • This year, Uber provided extra assistance to people with different accessibility needs, with over 3,400 driver-partners completing their training required for Assist rides, which is now available in 17 cities
  • Aussies love footy — the AFL Grand Final day (Saturday, 29 September) was the most popular day to take an Uber ride
  • Uber’s most frequent flyer hails from Melbourne, clocking a total of 447 trips to and from Melbourne airport in 2018

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Thanks for subscribing!

X