In its final weeks as a private company, Lyft is reaching for every inch of the rideshare market it can get.
To do this, it’s revisiting an old strategy: discounts. If you’re a Lyft user, you may have noticed the company has been offering cheaper rides in the last few weeks. Why? To encourage riders to ditch the Uber app in favor of Lyft and to tack on additional rides from users who may have otherwise hesitated to dole out the cash. After all, a $13 ride is a lot different from a $7 ride.
According to a report from The Information, Lyft’s discounts were extended to roughly one-third of riders’ recent trips and helped Lyft gather an additional 4 percent of the U.S. rideshare market. Lyft now holds 34 percent of the market, while Uber claims the remaining 66 percent. The additional percentage points will give Lyft a leg up as it launches its road show, the final step ahead of its Nasdaq IPO, expected in April.
We’ve reached out to Lyft to confirm the details in The Information’s report.
Devoted Uber riders may have noticed discounts, too. The competing ride-hailing giant also unleashed a hefty dose of discounts to keep riders on its app. Uber, of course, is also in IPO registration, expected to debut on the public markets in the first half of 2019, likely one or two months after Lyft.
Lyft was most recently valued at $15 billion and will garner a valuation north of $20 billion with its highly anticipated debut. Uber’s last private market valuation was roughly $72 billion; it’s expected to surpass $100 billion upon its IPO.
This month’s discount war isn’t the first time the two ride-hailing companies have cheapened prices to entice riders despite criticism from investors, who’d rather the companies focus on profitability. But this is Silicon Valley, even in a run-up to an IPO, when companies should theoretically be hyper-focused on profitability, Uber and Lyft seem to be just fine with continuing to burn through cash by subsidizing rides.
Uber and Lyft filed in December a draft registration statement with the U.S. Securities and Exchange Commission for their respective floats.
Lyft has selected JPMorgan Chase & Co. as the lead underwriter of its IPO, along with Credit Suisse Group and Jefferies Group. The company has raised $5.1 billion in venture capital funding to date.
Uber, for its part, has reportedly tapped Morgan Stanley to lead its IPO. It has raised nearly $20 billion in a combination of debt and equity funding.