By Robert Cyran
(The author is a Breakingviews columnist.)
NEW YORK, March 5 ( Breakingviews) - Lyft and Uber Technologies could leave other initial public offerings idling. The two ride-hailing firms could between them raise twice as much as the $7.1 billion tech debutants raised on U.S. exchanges last year. With plenty of others hoping to take similar trips to the public markets, Wall Street needs to get a lot more demand on the roads.
Lyft insiders are hoping its public listing will value the company as high as $25 billion, while Uber may be gunning for $120 billion. If each raises just 10 percent, that'll be $14.5 billion - or some two-fifths of money raised in all U.S. IPOs in 2018. The two may well be after more: Facebook, for example, sold a 15 percent stake when it went public. Uber and Lyft are also burning lots of cash as they fight for market supremacy, so the more they can stick in their coffers, the better.
With plenty of other private companies considering an IPO this year, bankers are going have their work cut out trying to sell sufficient stock at an attractive price. Of course, public demand for newly public companies is cyclical. The number of tech firms floating dwindled to near nothing in the economic crisis a decade ago. As markets recovered, investors were willing to take bigger gambles on unproven, futuristic and money-losing firms. Perhaps demand will be larger than in past years, given the rise in cloud software and e-commerce firms.
Yet plenty of other Silicon Valley-style companies also want to feed the ducks while they are quacking. These include giant private tech firms like Airbnb, Palantir Technologies, Pinterest and Slack. With so many jockeying for attention, getting the journey under way early looks like the best way to avoid getting left behind - or stuck in traffic.
- Lyft released its prospectus for an initial public offering on March 1. Insiders hope the listing will value the firm at between $20 billion and $25 billion, reported. The most recent funding round valued the firm at $15 billion.
- Rival Uber Technologies, which is worth some $76 billion, is also likely to go public this year. Proposals by bankers said the company could be valued at up to $120 billion, according to an October article in the Wall Street Journal.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.