Last week Lyft announced that it was seeking $62-$68 per share for its imminent IPO (initial public offering). At press-time speculation was rife that it might actually be as high as $80 when trading starts on New York's NASDAQ exchange. It's looking like the markets might value the ride-sharing company, which operates almost exclusively in the US, at $23 billion, making it the most valuable technology company listing in two years.
But that's petty cash next to Uber which is valued at $120 billion, making it the world's most valuable private company. Well-placed sources are saying that the higher-profile, more international Uber is planning to launch its IPO in April. And this week Uber announced that it was acquiring Careem for $3.1 billion. Dubai-based ride-sharing company Careem claims 30 million users across 90 cities in the Middle East, North Africa and Pakistan.
The sharing economy's financial people are busy. Airbnb, which recently bought HotelTonight, is also expected to seek a stock market listing this year and become a public company.
Does the fact that all the big sharing economy names in the travel space are seeking to go from being private companies to public companies? It is not unusual for successful start-ups after all. Yet is it a comment on the hunger of investors for tech companies in general or does it have implications for the consumers, and companies, who are their customers?
In line with many technology start-ups over the years Lyft has never registered a profit. Its valuation is calculated not on the traditional basis of multiple of profit but on a multiple of forward sales — in Lyft's case about 10.
Uber actually registered a profit last year but it was believed not to be as large as the combined profit of the Russian and Southeast Asian businesses it acquired. You see, private companies do not have to share figures in the same detail as public ones do. Airbnb says it is profitable but outside observers do not know precisely what its revenues or margins are.
Life is about to become very different for the travel industry disruptors.
Public companies are obliged to deliver value to shareholders and thus will be under immense pressure to generate short-term profits rather than focus on long-term strategies.
That could very well mean higher prices and rates — after all, the market has been won and the demand is now there.
Travel managers who are looking for savings in their ground transport or accommodation programmes need to take note.