Lyft’s IPO, has set the stage for its much bigger rival, Uber Technologies, whose IPO is slated for launch in April 2019.
In a significant development, Lyft Inc was valued at $24.3 billion in the first initial public offering (IPO) of a ride-hailing startup. Lyft raised more money than it had set off to since investors overlooked uncertainty over its path to becoming a profitable company.
Its IPO has essentially set to stage for the debut of its much larger rival, Uber Technologies Inc, which is slated to tap the market sometime in April. Investment banks have said Uber’s valuation could be as much as $120 billion.
Lyft’s successful IPO came despite its steep losses, concerns over its strategy for autonomous driving, and criticism of its dual-class share structure.
“In a good market, people look beyond things. They don’t see the problems as much,” said Brian Hamilton, co-founder of data firm Sageworks.
In the coming years, the ride-hailing industry growth rate is expected to surge in the coming years, as millennials in big cities choose not to buy their own car. Yet the sector, pregnant with unanswered questions, is fragile since the future of automated driving is so far unknown, with regulatory push-back and legal challenges over drivers’ pay and benefits are yet to be gauged.
Lyft raised $2.34 billion its IPO.
Lyft said it had priced its 32.5 million shares, at $72, slightly more than its original offer range of $70-$72 per share. Earlier this month, Lyft had commenced its IPO investor road show with a target range of $62-$68 per share.
Lyft’s stock will begin trading today on the Nasdaq under the symbol “LYFT”.
Smaller than its rival Uber Technologies, Lyft has so far focused on the U.S. and Canadian markets. However, unlike Uber, which has developed its own self-driving division, Lyft has chosen to strike partnerships to expand in the sector, including with car parts suppliers Magna International Inc and Aptiv Plc.
Incidentally,Lyft has the backing of General Motors Co.