Lyft IPO expected to compound Uber's troubles

New York

AN initial public offering for Lyft would amplify Uber's troubles. The ride-hailing firm is readying to go public as early as next year, Reuters reports. It would be an opportunistic way for the company, which was valued at US$7.5 billion in its last funding round, to capitalise on its larger rival's self-inflicted damage. Fresh capital for the second US player would merely compound the frontrunner's injuries.

A little over a year ago, Lyft was mulling a sale. The company lagged far behind Uber in drivers, passengers and money raised - and was receding quickly into the rear-view mirror. Uber had become the default app in the US and many other countries, and its scale ignited a virtuous circle: Drivers wanted to work for the company because that's where the passengers were, and vice versa. Moreover its prowess at raising cash - it had about US$13 billion on its balance sheet at that point - meant it could easily outspend rivals and keep pulling away. Lyft couldn't find a buyer at a fraction of Uber's valuation of nearly US$70 billion.