NEW YORK: Investor disappointment at Lyft Inc's growth outlook underscores the pressure for rival Uber Technologies Inc to show potential backers of its initial public offering that it can expand services such as food delivery even as its core ride-hailing slows down.
"If you believe in the Amazon model, you basically believe that Wall Street will fund these companies indefinitely with almost zero cost of capital, as long as they post these extraordinary growth rates," said Renny Ponvert, CEO of independent research firm Management CV."If that dynamic changes... things could get rough really quickly."
A person familiar with Uber's discussions with investors said the potential for Uber Eats in particular was resonating with investors. Uber's IPO is more than three times oversubscribed, the person familiar with the matter said.Uber is scheduled to price share in the IPO, expected to be the biggest of 2019, on Thursday, and then begin trading on the New York Stock Exchange on Friday.The company currently plans to sell 180 million shares in the offering to raise up to US$9 billion.
Lyft also raised some questions about Uber's focus on growth when Chief Financial Officer Brian Roberts said competitive pressure from promotional offers to riders"has recently receded".
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