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Lyft tries to differentiate itself from Uber in its IPO pitch

Krystal Hu

Lyft beat Uber in the race to the public market by filing for its U.S. initial public offering on Friday. The ride-hailing company is trying hard to persuade investors that it has unique advantages over its major competitors.

Lyft booked revenue of $2.16 billion in 2018 and a loss of $911.3 million, according to its IPO filing. As Lyft quickly gained market share amid Uber’s scandal-ridden 2017, its total expenses almost doubled in one year. The cash burn isn’t likely to stop anytime soon. The company lists sustained losses among its risk factors and sees expenses continuing to rise. “We have a history of net losses and we may not be able to achieve or maintain profitability in the future,” it warns.

The San Francisco-based company has been trying to differentiate itself from Uber by pitching its focus on the transportation industry. Lyft mentions it is a "visionary, founder-led company” and highlights its “Singular Focus on Transportation,” a stark contrast to Uber, which has expanded its business to food delivery, freights and even on-demand staffing.

"We are singularly focused on revolutionizing transportation," Lyft wrote in its IPO document. Serving only North America, the company's revenue mostly comes from ride-hailing and the company will seek to expand geographically and pursue acquisitions.

Lyft seems to have shown little interest in moving into the food delivery space, an area Uber has been booming in. "Today’s transportation status quo is unacceptable. Americans spend over $1 trillion every year owning and operating their cars, making it the second highest household expense (more money than Americans spend on food)," Lyft wrote.

Lyft drivers will receive shares

SAN FRANCISCO, CA - JANUARY 31: A Lyft driver places the Amp on his dashboard on January 31, 2017 in San Francisco, California. (Photo by Kelly Sullivan/Getty Images for Lyft)

Lyft recognizes in the prospectus that paying drivers as independent contractors is a core part of its business, and “any legal proceeding that classifies a driver on a ridesharing platform as an employee” could have an adverse effect on its business.

To engage contractors who work as Lyft drivers, the company made a novel move to grant shares to drivers, a practice that is prevalent among tech companies for full-time employees.

Current Lyft drivers who have completed at least 10,000 rides by February 25, 2019; and drivers who have served on the Driver Advisory Council are eligible to receive Class A common stock. Other drivers, depending on how many trips they have completed, can get cash rewards from $1,000 or $10,000 (for more than 20,000 rides), and choose to use the bonus to purchase shares through the company’s directed share program.

Uber is considering similar moves to reward their drivers, according to the Wall Street Journal.

Do you drive for Lyft or Uber? Share your thoughts with Krystal Hu via krystalh@yahoofinance.com

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