Ride-hailing service Lyft is set to become a public company on Friday when its stock trades for the first time under the ticker “LYFT” on the Nasdaq index.
The initial public offering, or IPO, of the company is one of the most highly anticipated offerings this year as other major tech companies line up behind it.
The offering has attracted quite a bit of investor interest, and one of its biggest investors General Motors could win big. The automaker invested $500 million in Lyft in January 2016 and holds 18.6 million Class A shares of the company.
What else should you know? Here are the ins and outs of Lyft’s IPO.
The offering includes 32.5 million shares of Class A common stock. On Thursday, Lyft priced the offering at $72 per share, according to the company.
Lyft’s original price range estimate was $62 to $68 per share. It increased that estimate to a range of $70 to $72 apiece on Wednesday.
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“That shows there’s more investors interested in buying shares than allocated shares,” says Ygal Arounian, a senior research analyst at Wedbush who this week rated the company’s shares “Neutral” with a $80 price target. “That’s typically a good sign to see a pop on the first day.”
How big is that? Lyft would be the year’s largest IPO so far, says Matthew Kennedy, senior IPO market strategist, Renaissance Capital, a provider of institutional IPO research. Lyft’s valuation of $24.3 billion is more than the first quarter’s other 17 IPOs combined, Kennedy says.
Is Lyft profitable?
While the company has grown its active ridership, number of trips per rider, number of drivers and the average revenue per ride, it still hasn’t turned a profit, according to Arounian and Kennedy. That’s not necessarily unusual for a private company going public, but Lyft has a ways to go, Kennedy says.
“It’s not common for a company this large to be coming to market with this big of losses,” he says.
How does Lyft plan to use IPO money?
In an earlier regulatory filing before the IPO pricing, Lyft estimated it would raise $2.1 billion if the offering price is $71 per share. The company plans to use the offering proceeds for working capital, operating expenses, capital expenditure, future acquisition or investments in new products, services or technologies.
Arounian expects the company to continue to invest in autonomous driving technology and more bike- and scooter-sharing opportunities. In November, Lyft acquired Motivate, the largest bike-share service in the U.S. It operates New York’s City Bike, San Francisco’s Ford GoBike, Chicago’s Divvy and Washington, D.C.’s Capital Bikeshare, among others.
When can I buy Lyft shares?
You can buy shares starting Friday morning when the stock begins trading on the Nasdaq. If you’re interested in the stock, but don’t like owning individual shares, you could consider investing in Renaissance’s IPO exchange-traded fund that will include Lyft in its portfolio.
What about the Uber stock sale?
Lyft’s IPO represents the first of several highly valued tech companies going public soon, including Pinterest and Lyft’s main competitor and the No. 1 ride-hailing company, Uber. Uber is expected to file for an IPO soon. It was last valued at $72 billion, Kennedy says, but the IPO value could climb as high as $100 billion to $110 billion, depending on the success of Lyft.
Contributing: Jamie LaReau, Detroit Free Press.