Alright, rideshare drivers! This is it!
Lyft has finally officially filed to go public as of Friday, March 1, 2019.
There are a lot of news out that are focusing on what this IPO means for Wall Street and investors, but what about rideshare drivers?
We want to make sure that every rideshare driver is 100% up to date about Lyft’s IPO and how it may impact them, so we’re going to continuously update this blog post with information that the rideshare community needs to know.
We’re going to cover the below topics:
- What does it mean to go public and why does Lyft want to do so now?
- What did we learn from Lyft’s IPO document (S-1 filing)?
- When will Lyft officially become public?
- Will rideshare drivers benefit from the IPO?
- Could this IPO potentially have a negative effect on rideshare drivers?
- How could this affect Uber’s potential IPO?
What does it mean to go public and why does Lyft want to do so now?
Companies like Lyft (and eventually Uber) file “IPO’s” or initial public offerings with the US Securities and Exchange Commission so that they can publically sell shares of their company. This creates a way to raise a substantial amount of money quickly.
Companies must submit a document called an S-1 to the SEC before they can go public, you can read Lyft’s S-1 here.
In this prospectus, Lyft states their reason for their IPO as the following:
The principal purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our Class A common stock and enable access to the public equity markets for us and our stockholders. We intend to use the net proceeds from this offering for general corporate purposes, including working capital, operating expenses, and capital expenditures. We also intend to use a portion of the net proceeds to satisfy our anticipated tax withholding and remittance obligations related to the settlement of certain of our outstanding restricted stock units, or RSUs. Additionally, we may use a portion of the net proceeds to acquire or invest in businesses, products, services or technologies. However, we do not have agreements or commitments for any material acquisitions or investments at this time. See the section titled “Use of Proceeds” for additional information.
Many industry analysts believe that Lyft’s main reasons for raising capital to increase their ability to invest future technologies like autonomous cars and new scooter companies like Lime while obtaining a significant amount of media attention.
As the first major TNC to go public, Lyft’s IPO will be the major talk of the industry for months. This will help the company step out of Uber’s shadow.
When will Lyft officially become public?
Lyft is staring a “roadshow”, which is a series of investor meetings, in the next few weeks it looks like Lyft will start trading on NASDAQ in April.
More details on timing to come.
Will rideshare drivers benefit from the IPO?
The impact of an IPO on rideshare drivers is complicated.
Lyft drivers that have been working with the company for a significant amount of time will undoubtedly receive initial benefits as drivers will receive cash rewards based on the number of rides they gave on the platform before February 25, 2019.
Drivers that have completed between 10,000 and 20,000 rides will get a $1,000 CASH bonus while drivers who have completed 20,000 or more rides will receive a whopping $10,000 CASH bonus.
Drivers that have been members of the Driver Advisory Council will also receive a $1,000 bonus.
Please note that drivers can only receive one bonus, which will be the larger bonus for which they are eligible and you must be in good standing to receive a bonus.
Payouts will begin on March 19, 2019.
Many drivers have already received notices that they will be getting payouts.
Another positive here is that Lyft’s payout will put pressure on Uber to ensure that their driver bonuses are as large or even larger than Lyft’s.
These initial positives are great, but it is unclear if there will be any long term changes as a result of this IPO that will benefit rideshare drivers.
Could this IPO potentially have a negative effect on rideshare drivers?
While many drivers will see big initial benefits from Lyft’s IPO, many industry analysts suspect that payouts are an effort to get in front of potentially negative news about how the company treats drivers.
An IPO is only going to cause even more investor pressure to become profitable, and become profitable quickly, which could cut into the pockets of rideshare drivers. This concern is causing many driving groups to start to question Lyft and other rideshare companies and press for better treatment, and even employee designations.
Another potential negative effect of Lyft’s IPO will be more drivers on the road for both Uber and Lyft. Not only does Lyft have more money to invest in driver acquisition, but the many drivers will be flocking to the roads to boost their ride numbers to make sure they have enough rides for a potential bonus.
And we all know more drivers on the road means less opportunities per driver.
On the other hand, more cash for driver acquisition would also mean more cash for rider acquisition, so the increase in drivers may be offset by the increase in riders.
What should drivers do as a result of this IPO?
Drivers need to start driving smarter and prep for change, both negative and positive, as a result of this IPO. We don’t know exactly what changes will be implemented, but every driver needs to be focusing on increasing their earnings per mile and per hour, as a potential influx in new drivers or an increase in Lyft’s commission could have a negative impact.
Did we miss anything?
This will be a live document over the next few months that we will continue to update as more information about Lyft’s IPO becomes available. If you have more news that we have not included in this article, let us know in the comments below and we will add it!