Lyft off? Former investment banker warns investors to be cautious

Lyft valued at $34.3b in first ride-hailing IPO

It's Time For Uber And Lyft's White Collar Workers To Step Up

On March 28, Lyft priced 32.5 million shares, slightly more than it was offering originally, at $72, the top of its already elevated $70-$72 per share target range, raising $2.34 billion in its initial public offering. The stock debuted this morning on the Nasdaq Global Select Market under the ticker symbol "LYFT".

Lyft's first day of trading went as high as $96.84 a share and as low as $75.49 a share before finally setting at $87.24 before the trading day ended at 10% increase.

Co-founders Logan Green and John Zimmer talked about their early vision of the company and their commitment to providing alternatives to individual vehicle ownership, at an event in Los Angeles, where executives celebrated Lyft's market debut.

Beating its rideshare rival Uber to the punch is an advantage for the second most popular app, giving it the opportunity to set the market's rate and attract new investors.

Lyft's IPO represents a watershed moment for ride hailing, an industry hatched from the rise of smartphones.

Despite the steep losses, D.A. Davidson analyst Tom White expressed optimism about the company in an investor note this month, citing "continued growth" of the broader ride-hailing market and "Lyft's impressive US market share gains and momentum".

Who gets rich: Rakuten, General Motors, Fidelity, Andreessen Horowitz, CapitalG, Floodgate, Valerie Jarrett, and Lyft co-founders John Zimmer and Logan Green have the largest stakes. It paves the way for other Silicon Valley companies seeking to float in the stock market this year, including Pinterest Inc, Slack Technologies Inc and Postmates Inc.

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The Boston-based financial services company has invested more than $800 million in Lyft, partly the result of leading a $600 million investment round in 2018 that valued Lyft at $15.1 billion. If Lyft was sold at $21 billion - sure, not the whole company but - and a day later is worth $30 billion then that's a failure.

The company's US market share has expanded from 22 percent in 2016 to 39 percent a year ago as Uber slogged through revelations about rampant internal sexual harassment claims, allegations that it stole self-driving technology and other mortifying issues, prompting a consumer backlash. The negative publicity helped Lyft attract new drivers and riders without spending much on marketing.

Based in San Francisco, Lyft had 1.9 million drivers and 30.7 million riders in 2018, operating in 300 markets in the US and Canada.

"Lyft has been successful against big odds because we have always prioritized the long term sustainable growth of both our community and our company", Zimmer said at the event.

Lyft says it will invest $50 million annually or 1 percent of profits in transportation initiatives in cities.

Uber, which is also loss-making, would be valued at about $128 billion at its IPO if awarded the same multiple as Lyft. Last week, after just two days of marketing to investors, Lyft's listing was oversubscribed. With its current rate, Uber is valued at around $70 billion on the private market, making it the most highly valued United States startup in the world.

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