Lyft Rockets Onto Public Markets With $2.3B Raise

Muriel Colon
March 31, 2019

Although the company reported a 2018 net loss of almost a billion dollars, investors clamored for a piece of the Lyft IPO, with underwriters reporting demand for the stock that was 20 times larger than the shares available, the Wall Street Journal said. "And now, after more than 1 billion rides, we're able to look forward to a world we've long imagined, designed less for cars and more for people". The spotlight was on Lyft because it was the biggest tech IPO since Snap went public in early 2017.

It's unclear what the true demand would be if Lyft's fares were set to the point at which revenue per ride exceeded the company's costs. Lyft trades on Nasdaq under the ticker "LYFT". The firm made a decision to raise its price range last Wednesday by as much as United States dollars 2.2 billion and investors have already been advised to place orders above the elevated range to increase their chances of succeeding.

Lyft's long-awaited debut on a USA stock exchange proved to be a success Friday, with the stock closing up 8.7% at $78.29 a share, giving the ride-hailing pioneer a $26.6 billion valuation after its first day of trading and auguring a warm welcome for other tech decacorns that have shunned the IPO pipeline for years.

On Thursday, Lyft said it priced 32.5 million shares, slightly more that it was offering originally, at $72, the top of its already elevated $70-$72 per share target range for the IPO.

After Lyft's co-founders Logan Green and John Zimmer rang the Nasdaq opening bell from a driver center in Los Angeles, shares took more than two hours to start trading.

Unlike Uber, which has developed its own self-driving division, Lyft has chosen to strike partnerships to expand in the sector, including with auto parts suppliers Magna International Inc and Aptiv Plc. On Friday, the company announced that it will be investing $50 million a year, or 1% of profits, in Los Angeles through Lyft City Works, which supports "locally-driven transportation and other initiatives to improve people's lives in every city where we operate".

Despite the optimism, there are some concerns that these tech IPOs may be coming at the peak of the market, when the benchmark S&P 500 Index has risen more than 200 percent since 2008.

Experts say it could be many years before autonomous vehicles are deployed on a large scale. It paves the way for other Silicon Valley companies seeking to float in the stock market this year, including Pinterest, Slack Technologies and Postmates.

Even so, Lyft's revenue per ride has been increasing, so some analysts see the company as headed in the right direction.

They got, in one reading, 21% less for the shares they sold than they could have had.

The following is a list of the biggest winners from the IPO.

The co-founder and president of Lyft owns 684,591 class A shares and 5,090,527 class B shares. The investments will include free or discounted rides for medical patients and low-income seniors and developing infrastructure for bikes, scooters and transit.

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