Lyft is deeply unprofitable - but that isn't stopping eager Wall Street investors

Jermaine Castillo
March 31, 2019

Lyft shares raced out of the starting gate but then throttled back slightly in a strong stock market debut Friday, raising $2.3 billion (roughly Rs. 15,971 crores) in an IPO that marks a turning point for the ride-hailing business and the so-called "sharing economy".

We told you that Lyft had decided on an IPO price of $72 dollars per share.

Shares in Lyft have jumped by 21% after the ride hailing company listed its shares on the Nasdaq stock exchange in NY. Its ticker symbol is LYFT.

Following mass worker action in Los Angeles, San Fransisco, and San Diego this week, an anonymous Uber employee-whose identity was verified by staffers at Medium - published an open letter in unequivocal support of the disgruntled contractors.

Shares in Lyft soared on Friday as Silicon Valley's first major flotation of the year demonstrated red-hot investor demand for a new wave of technology listings.

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"Our mission is to improve people lives with the world's best transportation, and today we are taking Lyft public", said Co-founder and Co-CEO John Zimmer. Developing autonomous vehicles is key to reducing driver costs, and Lyft is behind competitors such as Google spin-off Waymo, which has begun testing a ride-hailing service using its robotic minivans in the Phoenix area.

The co-founder and president of Lyft owns 684,591 class A shares and 5,090,527 class B shares.

But luckily for Lyft, Uber has been plagued with controversy over the last few years.

Uber, which is also loss-making, would be valued at about $128 billion at its IPO if awarded the same multiple as Lyft.

For much of its history, however, Lyft was also viewed as a distant second to Uber.

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Lyft's debut is the first of several high-profile IPOs expected to emerge this year from the technology industry, a sector that has helped propel the stock market in recent years.

"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. According to its filing, Lyft's share of the United States ride-hailing market spiked to 39% in December 2018 from 22% at the end of 2016.

Lyft is a startup "unicorn" that has Wall Street gushing with excitement, but don't jump on the Lyft IPO bandwagon just yet. Lyft also increased the size of the offering from the 30.8 million shares it had planned to sell. "We know the road ahead comes with both massive opportunities and genuine challenges".

Lyft has, for years, been seen in the shadow of its larger. The investments will include free or discounted rides for medical patients and low-income seniors and developing infrastructure for bikes, scooters and transit. It is, essentially, the only app around for ride-hailing in the capital.

Even so, Lyft's revenue per ride has been increasing, so some analysts see the company as headed in the right direction. It owns 18,544,716 class A shares and has a 6.5 percent stake in the company.

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