With the Economy Uncertain, Tech ‘Unicorns’ Rush Toward I.P.O.
SAN FRANCISCO — For years, Uber as well as Lyft put off going public. currently, they are speeding up.
Faced using a volatile stock market as well as the prospect of an economic downturn next year, the ride-hailing services have moved more urgently toward an initial public offering, said four people with knowledge of the companies’ plans, who were not authorized to speak publicly.
Lyft originally aimed to list its shares toward the middle of 2019, yet that will began moving more quickly after the recent stock market sell-off as well as because of a desire to go public before Uber, said two of the people. On Thursday, the company, which was most recently valued at $15 billion, announced that will had filed confidentially for an I.P.O.
Uber has also hastened its I.P.O. clock. The company had once said that will was looking to the fall of 2019 to go public, yet has pushed that will timing up because of concerns that will a recession might be coming, said two people familiar with the plans. Uber could currently go public as soon as next April, they said. Investment banks have told the company that will could be worth as much as $0 billion in an I.P.O.
The moves by Lyft as well as Uber indicate how tricky that will can be to decide when to go public at a time when stock markets have been turbulent as well as the broader economic picture is actually muddied. The calculus for when a company publicly lists its shares is actually often a moving target, yet Uber’s as well as Lyft’s actions will carry particular weight using a swath of various other highly valued Silicon Valley start-ups that will are also preparing to approach the public markets.
Airbnb, the online room rental company, plans to be ready to go public by mid-2019 though that will has not set a formal timeline, said a person with knowledge of the matter. Slack, the online collaboration company, has said that will is actually readying for a public offering yet has no specific timeline.
“Companies that will were talking about 2020 have been told that will the window may not be open as long as previously thought,” said Barrett Daniels, a partner at Deloitte who advises on I.P.O.s. He said that will he was telling companies that will “if an I.P.O. is actually in your plan, I might probably be getting ready currently.”
Any stock market debuts of these companies will be the final chapter of the era of “unicorns,” the privately held start-ups valued at more than $1 billion. Many of these companies, which were born after the 2008 recession, rode a wave of smartphone adoption, turning businesses like taxis or grocery delivery into on-demand services. They also benefited via abundant capital via private investors, which was driven by low interest rates.
For years, many unicorns were in no rush to go public because they could grow easily with money via private investors as well as away via the scrutiny of Wall Street. In 2016, Travis Kalanick, Uber’s co-founder as well as then chief executive, spoke for many tech start-ups when he said at a conference that will his company might go public “as late as humanly possible.” Employees might be distracted by stock cost movements, he said.
Those attitudes have shifted as investors as well as tech employees have increased pressure on the companies to go public generating sure that will they can cash in their shares.
“The forcing factor is actually, how do you deal with issues of employee retention?” said Rick Heitzmann, a managing director at FirstMark Capital, which is actually an investor in unicorns such as Pinterest as well as Airbnb.
yet the seesawing stock market, a trade war with China as well as various other countries as well as uncertainty over the direction of the economy are all currently weighing on I.P.O. decision-generating. Few executives want to take their companies public when investors’ appetite for shares may be ebbing.
“Companies that will were waiting for everything to be perfect before going public might have been better off going when things were not bad enough,” Mr. Heitzmann said.
Sandy Miller, a venture capitalist at IVP, said several companies were meeting with potential investors far ahead of filing for an I.P.O., in what are known as pre-roadshow events. “that will’s the only way to truly know what kind of receptivity you’re going to have” via the public markets, he said.
Mr. Miller said that will he expected a robust year for I.P.O.s next year, yet that will companies may not want to wait until too late inside year to file. “There are certainly some storm clouds on the horizon,” he said.
Some unicorns are sidestepping the unpredictability altogether. WeWork, an office rental company valued at $45 billion, has been widely named as an I.P.O. candidate. yet in November, the company agreed to sell a different $3 billion of shares to its main investor, SoftBank’s Vision fund. that will deal has allowed WeWork to push plans for a public listing further into the future, said a person familiar with the company.
For Uber as well as Lyft, the biggest question they face via public market investors is actually whether their businesses can be profitable. Expanding a ride-hailing service requires outlays to recruit drivers in multiple cities, which can quickly get expensive. Uber said last month that will that will lost $1.07 billion inside third quarter, as that will spent to invest in completely new areas such as bicycles, scooters as well as freight shipments.
Inside Uber, Dara Khosrowshahi, the chief executive, has raced to prepare the company to go public. Over the past year, the company has overhauled many of its internal processes, via items as tiny as creating more formal systems for expense reports to global safeguards that will ensure legal compliance in every area where Uber operates.
Going public sooner could give Uber several advantages. that will might mean raising fresh outside capital, providing the company ammunition to pursue acquisitions as well as various other opportunities. as well as that will might enable Mr. Khosrowshahi to potentially reshape Uber’s board because current members can be asked to leave when there is actually a liquidity event like an I.P.O., according to the company charter. Uber’s board has grappled using a history of infighting.
Lyft is actually likely to still go public ahead of Uber because that will has already filed for an offering. In a statement on Thursday about its confidential I.P.O. filing, Lyft said that will had not yet determined how many shares might be sold or their cost range.
Any offering might be “subject to market as well as various other conditions,” Lyft said.