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News broke yesterday that IPO is racing towards us, with the popular ride-hailing company , and the company ready to . The unicorn, which originally filed privately late last year, looks set to beat rival to the public markets.

A final tidbit of information came out yesterday that caught our eye. According , who broke the story on Feb. 20 concerning Lyft’s impending roadshow, “Lyft now expects to be valued at between $20 billion and $25 billion in its IPO.”

I couldn’t recall where that valuation fit compared to Lyft’s preceding valuations, and, honestly, what its most-recently known revenue figures were. My brain is an Uber-mush. So, let’s quickly recall what we knew, and stack those data points next to Lyft’s expected price tag.

History Lessons

Let’s rewind the clock to 2017. Reported in early 2018, Lyft detailed some of its financial performance. According to : “Ride hailing [sic] company Lyft says it booked over $1 billion in GAAP revenue for 2017, and showed revenue growth of 168% in Q4 versus the prior year’s quarter.”

That’s a useful set of metrics as it includes an absolute revenue result and a growth pace.

A quick note on what the statement means, however. In corporate accounting, “GAAP,” an acronym, means “no bullshit.” So, when we see “GAAP revenue” in the case of this Lyft metric, we can assume that the $1 billion revenue result is something near to what the company could report in an IPO filing; it’s not polluted with stuff that won’t eventually count as revenue.

From that 2017 result, we can turn to what Lyft did in 2018. For more detail on Lyft’s performance during the first half of 2018, read this summary. If you don’t have time (I understand), here’s the short version: Lyft’s revenue grew from $412 million in the first half of 2017 to $909 million in the first half of 2018. That’s a growth rate of over 120 percent.

However, the growth and larger revenue base cost Lyft: The ride-hailing unicorn lost $255 million in the first half of 2017 (precisely what this metric counts isn’t clear, so treat it as more directional than definitive), and $373 million in the first half of 2018.

Lyft’s Growth

We don’t have an H2’2018 Lyft revenue result, sadly. But we can make up our own by using different growth rates. The resulting figure will let us see what sort of revenue multiple the ride-hailing company could enjoy at valuations of $20 billion and $25 billion.

Presuming that Lyft grew its H2’2018 revenue by, say, 30 percent from its H1’2018 total would give the company about $2.1 billion in revenue. At a $20 billion valuation, the company is worth just under 10 times its 2018 revenue haul. At $25 billion, the figure rises to a multiple of just under 12.

(Reference articles on changes to the IPO filing process rule book can be found , and .)

For fun, push up Lyft’s growth pace, boosting its H2’2018 revenue, as far as you think fair, and see what the change does to the implied revenue multiple range that Lyft could enjoy in 2019. At 40 percent H1’2018 to H2’2018 growth, for example, Lyft’s full-year revenue reaches nearly $2.2 billion. Its revenue multiples at $20 and $25 billion slip to 9.2 and 11.5. At 50 percent they fall to 8.8x and 11x flat.

Are those rich, neutral, or stingy revenue multiples? Let’s ask Uber.

Uber At $120B

Uber’s fourth-quarter financial results recently came out (our coverage here), but what we want more than a quarter’s view is a full-year tally. So, let’s lean on :

“Compared to the entire fiscal year of 2017, Uber’s gross bookings increased 45 percent, to $50 billion in 2018. That resulted in a GAAP revenue increase of 43 percent, from 2017 to $11.3 billion. Losses also improved (decreased) from $2.2 billion in adjusted EBITDA losses in 2017 to $1.8 billion in 2018.”

The figure we care about the most there is the $11.3 billion figure. Recall that Uber’s rumored IPO valuation is $120 billion. When we last compared Uber’s results to the price tag, we didn’t have its fourth-quarter results. We do now!

At a valuation of $120 billion, Uber is worth about 10.6x its 2018 revenue tally. That’s right in the same range as what Lyft is reportedly aiming for. However, Uber is growing more slowly than its smaller rival in percentage terms (this is when scale becomes an effective incumbency tax in side-by-side percentage growth comparisons!).

If Uber can command a similar revenue multiple despite larger losses (in gross terms; we’ll have a better idea of relative performance when we have both S-1s) and slower growth (implied via recent performance; again, we’ll see) will be interesting. Certainly Uber has more of a global story to tell. Lyft, in contrast, has a domestic tale alone.

So What?

Summing for those of us who got bored, Lyft’s reported target IPO valuations seem pretty in line with what Uber is expecting for itself. How effective each company will be at convincing investors that it’s the special one of the two isn’t clear, but they are seemingly close in terms of targets for now.

With Lyft just over the horizon, get hyped. We’re finally going to get some gosh-darn decacorn liquidity (Dropbox wasn’t worth $10 billion when it went public, so its IPO doesn’t count) and that’s exciting.

More when we get our mitts on the S-1.

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The highly-anticipated Uber and Lyft IPOs may move forward more slowly than expected due to the partial government shutdown. According , the two famous U.S. technology companies “have yet to receive feedback from the U.S. securities regulator” regarding their yet-secret IPO filings.

We know a lot about Uber’s numbers, but not everything. We know less about Lyft’s, but do have some notes on the broad strokes. Their eventual public S-1 IPO filings will represent the culmination of nigh-endless work and tens of billions in global capital (Uber’s funding list is ). And , the firms wanted to go public in the first half of this year.

If that timeline is in jeopardy isn’t clear, as the timeline for the shutdown itself isn’t clear. If the government hiatus continues for weeks, Uber and Lyft could likely still get out in the quarter if their filings don’t need more work. If the shutdown continues for months—and the President —the picture gets cloudier.

There are other companies looking to go public that could be impacted by the same issues. Recall that we are expecting Slack, Airbnb, Pinterest, and others this year. The 2019 IPO class is tipped to be decked with big names. They could be pushed back, too.

So What?

What’s the big deal, especially given that many of the companies we’re discussing are anything but young? Haven’t these companies been private for longer than historical norms? What’s the rush?

Let’s construct a scenario: The government stays shut down for another month or more. The SEC doesn’t get to IPO work until after, pushing most debuts into the second quarter. (I’m spitballing here, but walk with me.) And in that time period, the stock market falls, costing the Nasdaq 1,000 points.

Finally, Lyft and Uber get to go public. But they are now forced to do so at a valuation discount due to changed public markets. That’s a big lot of not good for the pool of global capital that is expecting Uber to debut at one valuation or another. If the company gets a haircut, it could bring a lot of pain.

The longer the shutdown, the longer the SEC disruption, the more risk that the 2019 IPO class takes on in the form of potential market volatility. It’s hard to go out when things are good if you literally can’t due to government dysfunction.

2019: Already dumber than 2018?

Many famous technology unicorns—growth companies valued at over $1 billion—that have remained private longer than historical norms are looking to go public next year. Their calendar, however, just shrank.

According to JP Morgan, and , 2019 and 2020-planned unicorn IPOs are compressing their timelines to get out while the getting is good, or, perhaps, while there is still getting to be got.

Here’s the key quote:

[T]he sharp decline in stocks this month has investment bankers feverishly working to help companies file earlier in 2019 on the risk that markets get even less accommodating later in the year [according to Jennifer Nason, the JP Morgan global chairman of investment banking].

“Anyone thinking they had plans to go public in 2019 is accelerating those plans,” she said in an interview. “The first half of 2019 could be a lot better than the second half of 2019 or 2020.[“]

This shouldn’t be a surprise.

The noted share price declines and the expected set of unicorn IPOs have been a key conversation point among techies in recent months.

Here’s how the two trends interact. Many private tech companies have incubated in favorable weather. Their growing period was long, fed by endless, cheap capital, and powered by a long economic expansion coupled with a strong stock market. Those factors allowed the unicorns, and their larger, more valuable decacorn siblings, to grow to huge sizes in terms of worth and scale.

But even the largest company needs to provide liquidity to its investors at some point, and many unicorns couldn’t get themselves to pull the trigger on an IPO—they didn’t have to. After all, why not raise another stack of private capital, grow for another year, push profitability out even further to the future, and not answer to shareholders?

The model arguably worked better and better as time went along. The venture capital market has focused more on larger checks to fewer companies in recent quarters, a trend that we can see in the rise of supergiant ($100 million or larger) rounds, and the incredible run that the Chinese startup scene has itself seen in recent years. So, up to the end, there was more and more capital available in potentially larger helpings for our unicorn crop of companies struck heavily with what we call Peter Pan syndrome in San Francisco.

But larger checks mean larger valuations, which puts extra pressure on the companies in question regarding their eventual liquidity. The more value you have locked up in your firm, the more that your eventual exit matters. And the larger you become, the less likely it is that some external company will snap you up; you’re going to have to go public.

That was not a scary thought until recently, as the public markets just kept going up. Amazon hit a trillion after Apple hit the mark, and things looked hot. Fear was still on layaway, and the good times were still good.

Fear

Until they weren’t, and fear’s profile rose.

With , unicorns that still need to go public while things are good are crunched for time. If, say, Uber waits too long to go public, it may debut at a time when public investors have parked miles away from its private valuation, forcing the company to go public at a discount to its prior valuation.

Run that math a few times across different IPOs and you’re cutting a chunk of flesh from industry investors, founders, and employees. Companies don’t want that to happen as it would break an implied commitment to their employees who took a portion of their compensation in stock; no one wants a pay cut. Employers especially don’t want to hand them out in a labor market as tight at tech’s own.

So we’re seeing stocks fall and IPOs accelerate in hopes of getting out before things get worse, perhaps protecting valuations in the process.

But we’ve actually already seen what happens when the public markets check the private markets’ homework and find computational errors. Blue Apron was torn apart by the stock market; Snap is ; and Dropbox, a unicorn-era darling, is trading beneath its IPO price and is worth billions less than its 2014-sourced private valuation.

But if you are a company looking to get out regardless, probably sooner is better than later as you can control more in the short-term than you can looking further out.

And that’s why the unicorn IPO traffic jam we’ve written about for years could turn from an orderly queue in 2019 and 2020 into something more akin to a stampede next year. Get ready.

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