The president’s partial government shutdown created a plethora of unforeseen issues in the tech world. According to Silicon Valley financial and tech experts, 2019 should be a banner IPO year. Airbnb, Uber, and other Silicon Valley startups want to go public. But 2019 may not be the year that produces IPO history.
But Lyft decided to buck the odds and registered for its initial public offering with the Securities and Exchange Commission, recently. Lyft executives know there are political as well as legal issues involved in their filing due to the rapidly changing regulations and shifting laws that pertain to ride-hailing apps.
One issue that could derail Lyft’s IPO is how the company classifies its drivers under the current labor laws. Plus, the new privacy data collection laws that continue to surface may impact Lyft’s quest to let the public invest in their business model.
The Lyft initial public offering will generate an enormous amount of interest from the public, according to Brookings Institute senior fellow, Mark Muro. But Muro also thinks the tech uncertainty in Lyft’s business model will enhance risks for public investors. For example, Lyft classifies drivers as independent contractors, but according to court documents, they may not be independent contractors. There are several lawsuits in the works that challenge Lyft’s driver classification. Six lawsuits say Lyft drivers should be company employees.
That issue could keep investor away from a Lyft IPO, according to Muro. The other Lyft issue that concerns some investors is the company’s new scooter and bike transportation services. Local officials around the company think those services are safety hazards, and that issue is still the subject of several court battles.
Lyft executives know the future of the company depends on autonomous vehicle regulations. But those regulations are still up in the air. Self-driving cars laws changes could delay the Lyft IPO as well as make it more expensive to implement.
The other fly in Lyft’s IPO ointment is the collection of personal data and location information. New regulations may limit what Lyft can collect and use. Lyft knows the industry is under a lot of private and public scrutiny. And the new rules and regulations that result from that scrutiny could have a dramatic impact on their business model. But lyft executives still want to go public before Uber and other companies cut through the government red tape and hurt their chance for bragging rights and the IPO riches and challenges that go with those rights.
