Investors wishing to buy Lyft stock will have to wait at least until 2017 for the company to go public with an IPO. The company continues to expand aggressively into more US cities along with a handful of International cities and any IPO will have to wait. The ride sharing business is still not a profitable one for either Lyft or its main competitor Uber due to all the funds these two companies are deploying toward expansion.
In late 2016, Lyft is estimated to be worth about $5.5 billion which is less than one tenth of Uber’s valuation. If Lyft cannot start to close that gap, it could have an affect on Investor’s willingness to buy the stock should the company decide to go public.
You Might Never Be Able To Buy Lyft Stock
In August of 2016, rumors started circulating that Lyft was shopping around the idea of selling itself to potential buyers including General Motors, Google, Apple, and Amazon. But company President John Zimmer officially repudiated those rumors saying that Lyft was absolutely not for sale and not looking for buyers.
The idea of Lyft getting bought out by a bigger company actually makes a lot of sense and could happen sometime in the coming months or years. Clearly, ride sharing and autonomous vehicles are thought to be a big part of our transportation future and a company like GM or Google that has that type of aspirations and has enough money to buy Lyft could save a tremendous amount of time by buying it.
At its current valuation of $5.5 billion, it would be a big acquisition but one that is not out of the question and might be welcomed due to Lyft’s battle with Uber that it seems to be losing. Should a Lyft buyout ever occur, it would mean the company would never have an IPO and investors would never be able to buy stock in the company.
Government Regulations Continue To Trouble Lyft
Both Lyft and Uber continue to encounter pushback from an assortment of governments. Local, city, state, and other governments are all grappling with how Lyft affects the well entrenched taxi cab business as well as how to ensure the safety of passengers as they increasingly use ride sharing services. Lyft has encountered a constance barrage of regulations and rules that hampers its ability to offer its services in certain regions. Much money has been spent fighting such regulations and it seems there is no end to the legal challenges it may face in the future. Funds must be allocated by Lyft for the express purpose of challenging the legal obstacles placed before it just so it can continue to do business.
The legality of ride sharing will eventually be figured out but how many years it will take and the money that must be spent in courts by Lyft is unknown. For Lyft to have a successful IPO in 2017 or later, there must be some clearer path to profits than there is at this time. This is one of the main reasons that Lyft is not in a rush to go public and wants to get its business on firmer ground before offering an IPO.
Lyft Will Either IPO Or Get Bought
Any company valued in the billions as Lyft is will either go public or get bought out. Should it decide to go the route of having an IPO, it will give individual investors an opportunity to buy Lyft stock and own one of the two dominant ride sharing companies. Since ride sharing seems to be gaining in popularity worldwide, this type of company is one that many people think will succeed and any IPO will get a lot of attention. As of late 2016, the “sharing” economy is booming but investors are still unable to buy stock in any such company (Airbnb, Uber, Lyft, WeWork, etc).
Stocks of companies that people personally use usually get more hype at IPO time, especially when they represent a new business model as Lyft does. But while an IPO will probably be successful and get lots of press, whether buying Lyft stock will be a good financial move is another question. Lyft will have to prove it can be profitable and compete with the much larger Uber at the same time for the stock to do well during the months and years after the IPO. It will have to successfully show that it can operate in a variety of locals and it will probably have to continue to expand its reach internationally as well.