Chris Hill: Headline newsflash: "Dow sinks 500 points as Britain's Brexit mess fuels investor angst.
U.S. markets deepened their losses Monday as Britain's political crisis around Brexit
clouded investors' outlook.
British Prime Minister Theresa May delayed a key Parliamentary vote on her country's
exit from the European Union." Thanks! Taylor Muckerman: [laughs] Yeah, turns out
decisions made by the English still impact Americans.
Hill: Yes, they do. You asked me, "Why was the vote delayed?"
The only reason votes are ever delayed: because it wasn't going to pass.
Muckerman: They're not going to get what they want. Hill: Exactly. So, that's happening. Hopefully... [sighs]
Muckerman: You might have to talk about it again tomorrow.
Hill: You know what? It's oddly comforting to know that, when it comes to legislative bodies dealing with the
elected leaders of countries, it's not just the U.S. that can get messy now and then.
Alright, let's get to the first thing that we're going to talk about.
That's the recent filings of Uber and Lyft to go public.
Not just that these are two companies that have routinely showed up on the list of...
I mean, pick your list. Most anticipated IPOs, biggest private companies to consider going public.
But, they're in the same business. I'm curious how you think about these two.
I say they're in the same business, you dig a little deeper, the way that they have set
up their businesses, they appear to be going after different things.
Muckerman: It seems like that.
When you look at these companies, Uber, the biggest, the first, about 4X the size if you
look at employee count worldwide. But its losses in the last quarter were also 4X as large.
They reportedly lost $1 billion in the last quarter. Lyft lost about $250 million.
Like you mentioned, Uber, not only is it bigger and older, but it is also trying new things.
They purchased a bicycle rideshare company Jump recently.
They have Uber Eats, which is a massive network inside of Uber.
Also, they're partnering with Toyota, invested $500 million to start putting some Uber driverless
technology into their minivans. A little bit larger than Lyft, but Lyft is following suit nicely.
Uber might have had a chance to put the nail in the coffin for Lyft last year, but we all
saw the problems that erupted within Uber.
Sexual harassment allegations, allegations that they stole IP from Alphabet.
Then, other allegations that they were skirting regulators. I think they missed their chance.
Lyft was able to raise more money.
Now they might go public, they might go public before Uber, raising a significant amount
to then broaden their business, potentially.
While Uber has the lead in pretty much every category, I think they might have missed their
opportunity to really stake their claim as No. 1.
Yes, they do have over 60% market share in the U.S. vs. roughly 30% for Lyft.
But I think this is going to be an ecosystem, at least domestically, where they both coexist
and can start to thrive if they're held more accountable by public shareholders.
They've been just burning cash every single quarter with only the private eye watching them.
Hill: Lyft has absolutely taken advantage of the opening that Uber gave them in the
wake of the whole Travis Kalanick debacle, in ways that, in a completely different industry,
Pizza Hut has not taken advantage of the problems at Papa John's.
Muckerman: Somehow. Hill: Yeah. So, kudos to Lyft for doing that.
In terms of, which one is going to go public first, long-term, does that matter?
A lot is being made in the financial media of -- and, I understand it, if you're in the
business of writing headlines -- the race to go public first. They're two ride-sharing companies.
I get it. But I look at it and go, OK.
If you put a gun to my head and asked me, "Which one went public first, Dropbox or Box?"
I have no idea. I think long-term, it probably doesn't matter all that much.
Or, is it something where, yeah, short-term, it doesn't matter, but long-term, it actually does?
Muckerman: Short-term it could, just based on the hype around the IPOs.
Maybe people get burned out on the one that comes second if they already spent a ton of
their money allocated towards ride-sharing, I guess, however these portfolio managers might look at it.
But I can only see this as being an advantage for the company that goes first if it came
out of nowhere and the second company was caught completely flat-footed, but they're
going to be IPO-ing in a relatively similar timeframe.
So, yeah, I don't think that one's going to have a necessary advantage in terms of putting
that newfound capital to use in any specific way.
You might have a little bit lackluster of ribbon-cutting for the second one, but I don't
foresee it being a big deal for investors if you're looking at a multi-year time horizon.
Hill: Have you seen anything thus far that gets you more interested in one over the other?
Muckerman: As a user, I've stuck with Uber for the most part, so I guess my allegiance would be right there.
But I think that Lyft has been a little bit more focused.
They've kept themselves out of the negative PR circus that Uber has found itself in,
and has kind of gotten itself out of, but there's still some overhanging there from public perception,
as well as the way that they've treated their drivers.
But, whichever company is able to create the better ecosystem for not only its users,
but its drivers as well, that one will probably treat investors better in the long run.
Right now, I don't necessarily have a favorite. It just depends on if you want the scale that Uber has.
But it's not making more money. The margins aren't significantly better.
Operationally, you could go either way.
Hill: To go back to something you said earlier about the pressures of being a public company,
because there are significantly more pressures for public companies than private companies,
I could see that being ramped up on Uber more so than Lyft -- put aside all the stuff with
Kalanick -- simply by virtue of the fact that they're trying so many more things.
If both these companies go public, and you're an institutional shareholder putting pressure
on Lyft, it's really about operational stuff.
With Uber, it's more like, "Look, can you scale back the food delivery stuff and just focus on this?"
Muckerman: Yeah, because they made a huge bet on driverless technology.
Maybe that doesn't work out.
Maybe they should have just waited and then licensed driverless technology from a Waymo
or other companies that are out there excelling way more at this.
That's their singular focus in a lot of ways. Hopefully, they can stay on the right track.
It appears that they're starting to be.