When a company goes public, it typically raises money by offering shares to investors via an initial public offering (IPO).
Recently, Ryde – a Singapore-based company – has raised US$12 million (S$16 million) from an IPO on the New York Stock Exchange (NYSE) under the ticker “RYDE”.
So, what should investors know about Ryde (NYSE: RYDE) and why has it gone public now through an IPO? Let’s find out.
Boutique ride-sharing platform from Singapore
Ryde is a ride-hailing and carpooling firm that was founded in Singapore in 2014. The firm also has a presence in Malaysia, Hong Kong, and Australia.
However, unlike Grab and GoJek, it differentiates itself from its competition by adopting a more organic approach to growth.
Ryde relies on “word of mouth” referrals to grow its user base and over two-thirds of the platforms users come from these referrals.
Another service under the Ryde umbrella is its “Quick Commerce” offering, which is a delivery booking service. This sees e-commerce businesses, F&B outlets, and social sellers using its “last mile” delivery service through its driver partners.
Ryde was also one of the first ride-sharing platforms to offer a carpooling service in Singapore where riders could pay a lower fee.
This lower fee is contingent on them being willing to share their ride with other passengers and have multiple stops.
As a much smaller ride-sharing platform, it also charges its drivers a much lower commission rate (only 10%) versus dominant rider-sharing companies like Grab (which charges its drivers 20%).
Indeed, it was only the fifth-largest mobility group – by gross transaction value (GTV) – in Singapore as of the end of 2022. That gave the company a market share of just 2.5%.
Source: Ryde IPO filing prospectus
In an attempt to instill loyalty to its platform, Ryde also offers its users the option of applying for a subscription on a monthly basis.
Called “Ryde+”, users can enjoy unlimited cashback on certain ride types, priority matching with drivers, and exclusive discounts at select retail partners.
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Ryde IPO to raise money for expansion
Ryde’s shares started trading on the NYSE last Wednesday (6 March) after pricing its IPO at US$4 per share, the low end of the US$4-5 price range it had offered to investors.
After the first day of trading concluded, its shares finished flat. However, since then it has risen strongly and last Friday (8 March) its shares soared by over 18% to finish trading for the week at a price of US$5.33.
In its S-1 IPO filing prospectus, Ryde claims that around 15% of the funds raised would be used for market expansion in Southeast Asia and other countries, including Australia and New Zealand.
Meanwhile another 20% would be on R&D for its service offerings on its mobile and web platforms and another 20% would be for marketing and brand-building activities.
The remaining 45% would be used for working capital and other general corporate purposes.
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Small, loss-making company
While it’s looking to expand in Singapore, investors should be aware that Ryde is still a loss-making company.
In that respect, it’s not an exception among its peers. For the whole of 2022, it recorded revenue of S$8.8 million but its net loss was S$4.96 million.
That net loss climbed from the S$1.24 million in losses it recoded in 2021. Ryde also outlined in its IPO prospectus that its accounting firm had “raised doubt about the company’s ability to continue as a going concern”.
That likely relates to its cash burn rate and its negative working capital of S$461,000 as of the end of 2022.
Despite its strong share price gains since going public, investors should remain cognisant of the fact that Ryde only has a market cap of around US$100 million.
The company has ambitious plans to expand more globally but investors in Ryde shares should be aware of its loss-making business and micro-cap status.
As a result, its shares are likely to be highly volatile in the future if the business does not meet the market’s expectations.
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