By Spencer Feingold
Lyft off! In a highly anticipated initial public offering, Lyft shares were priced Thursday afternoon at $72 a piece, the top end of the expected price range.
The ride hailing company’s IPO has excited investors for months, especially in recent days after Lyft increased its share price target range to between $70 and $72, an increase from the initial $62 to $68 range.
“In the land of IPOs and a bull market, they are not incredibly high priced. I think that are pretty fairly priced,” Brian Hamilton, founder of the financial tech company Sageworks, told Cheddar on Thursday.
Lyft also increased the number of shares it sold to 32.5 million from 30.8 million.
Under the ticker LYFT, the company will go public Friday morning on the Nasdaq Global Select Market. The share pricing means the company could be valued at $24.3 billion or more.
Founded in 2012, Lyft was originally known for the fuzzy pink mustaches fixed to the hoods and grilles of its cars and largely seen as the younger brother of Uber.
Seven years later, the company has completed over one billion rides and serves more than 30 million riders annually. The number of Lyft drivers rose to 1.9 million in 2018.
Lyft reported $2.2 billion in revenue last year and over $8 billion in booking transactions. The company, however, reported a net loss of $911.3 million in 2018 ー the “highest losses of any IPO in American history,” according to Hamilton.
Lyft is “focused on continuing to build our platform with the characteristics that are critical to winning and maintaining strong user relationships at scale, including size, marketplace density, brand affinity, trust, affordability, reliability and expertise in building and scaling networks,” the company said in its filing to the federal Securities and Exchange Commission.
In 2017, consumer expenditures on transportation were approximately $1.2 trillion, according to Lyft.
“We believe that Lyft currently addresses a substantial majority of this massive market, and we intend to further extend our offerings to capture more of this opportunity in the future,” the filing added.
“This is a lot about what the future holds,” Ian Sherr, editor at large of CNET, told Cheddar.
While it has plans to expand internationally, Lyft currently operates only in the U.S. and Canada. By contrast, Uber operates in over 60 countries.
“In the near term, [the IPO] is a domestic play,” Dan Ives, managing director of equity research at Wedbush Securities, told Cheddar. “But it’s about profitability. It will be incrementally tough for them to go after those international markets.”
Sherr said that Uber, which is also set to go public in 2019, will try to differentiate itself with its vast international presence; whereas Lyft promotes the "idea that they are more friend both to the riders and drivers."
Investors are also watching both companies closely to identify technological advantages and see how they approach a future with autonomous vehicle.
Lyft is offering tons of perks to its drivers, Sherr said, but both Uber and Lyft "have made it clear that once automated driving is possible they're going to get rid of all these people.”
Regarding the success of the IPO, Hamilton predicted that the market will ultimately drive long term value for the company.
“Every company that goes public, every single one, says they are the unique story,” Hamilton said. “The truth is you always have to look at the fundamentals: sales, profitability, valuation.”