If you’re passionate about something, chances are there’s a stock to match your passion. If you enjoy playing video games, you can buy individual video game company stocks or a gaming ETF. If you’re interested in the seedier side of life, there are publicly traded securities for strip clubs and casinos. Simply put, if there’s a business or industry, there’s a stock.
Yet most companies aren’t publicly traded. Millions of businesses big and small are privately owned, funded, and maintained. These companies might sell stock to private shareholders with hopes of raising money, but they’re nowhere near ready to sell shares to the masses. This could be due to the lack of profitability, changing businesses strategies, or simply because they do not want to.
Uber and Lyft are two major tech companies with millions of users and billions in revenue. These ride-sharing companies are used all around the world and employ thousands of independent contractors (drivers). They’re also slowly putting regional taxi companies out of business due to competitive prices and ease of use.
Both companies aren’t listed on any stock exchange. You can’t buy stock in Uber or Lyft, as they only accept money from private investors. At the same time, millions of investors and funds want to give these companies as much money as possible. So, why are these two industry leaders nowhere to be found on Wall Street?
Uber and Lyft are losing money.
Like most startups, Uber and Lyft aren’t profitable. They make billions in revenue each year, but they spend more than they make. A company doesn’t need to be profitable to become publicly traded (see Twitter, Snapchat, and Blue Apron), but being on the path to profitability sure helps a company/stock’s value and wins over shareholders. If one or both companies become profitable in the near future, the chances of them going public will increase.
Uber has a lot of fires to put out.
Uber just lost their CEO and founder. This major shake-up is the last thing any company wants to face, especially one with the potential to go public. They’re also facing a number of sexual harassment scandals, criticism for anti-driver practices, and repeated backlash from users. Hiring a new CEO would turn the company around and fix these aforementioned problems, which would then help repair the company’s bad reputation. Only then would the company even think about going public.
Lyft has their own share of problems.
Lyft is nowhere near as big as Uber. Sure, they’re a multi-national corporation with millions of users — many who deleted Uber in favor of Lyft. Yet there have been numerous times when Lyft’s mere existence was called into question. The company even (allegedly) tried to sell themselves in the past. The ride-sharing startup recently raised a decent chunk of money to keep them in business, but this won’t keep them afloat forever. They too need to cut costs and inch toward profitability if they ever want to launch a stock.
Should you invest in Lyft or Uber if/when they go public?
Uber and Lyft are far from reaching profitability. Though one is more troubled than the other, both companies still have a bit of growing to do before they even think of launching a stock. In some cases, this means adding more users or maximizing the amount of money they get per rise. This also means marketing the companies as more than high-tech fads and solidifying their existence as industry mainstays.
When either company decides to file their IPO and sell stock, you’ll most certainly hear about it. Uber is currently worth over $60 billion as a private company, and launching their stock would be a major event. If Lyft goes public before Uber, it could do even more to hurt Uber’s reputation and help Lyft get out of the #2 position in the ride-sharing space. Until then, both companies have a lot of work to do.