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Lyft IPO sets rollout for ride-hailing, sharing economy
WASHINGTON, March 29, 2019 (AFP) – Lyft is raising some $2.5 billion in
its Wall Street offering, which is seen as turning point for the ride-hailing
business and the so-called “sharing economy.”
The San Francisco-based firm expected to begin trading as soon as Friday at
$72 a share, Lyft said in a released statement.
“This is a clear, positive indicator of robust investor demand heading into
the company’s first day of trading tomorrow,” Wedbush analyst Daniel Ives
said in a note to investors.
Ives called Lyft’s stock market debut a “watershed” event for the tech
sector and ridesharing industry that he saw as “one of the most
transformational growth sectors of the US consumer market over the past five
years.”
Lyft will have a valuation of at least $20 billion with the initial public
offering (IPO), one of the first from a wave of venture-backed “unicorns,” or
startups worth $1 billion or more.
It will trade on the Nasdaq exchange under the symbol LYFT.
Lyft’s entry to the public markets comes ahead of a hotly anticipated
offering from larger rideshare rival Uber, which is valued at some $70
billion, and other tech startups including the business collaboration firm
Slack and visual discovery engine Pinterest.
Both Lyft and Uber are promoting their moves as lifestyle-changing, which
could wean dependence on private cars and help reshape urban landscapes.
“Ridesharing has transformed our lives, making it easier and cheaper to get
where we need to go, and it’s pioneering an undeniable trend toward
transportation as a service,” said a research note this week from Gene
Munster and Will Thompson of the investment firm Loup Ventures.
These firms, which are stepping up moves to autonomous rides, have been
expanding aggressively — with Lyft gaining market share in the United States
and Uber in dozens of international markets.
They have also sought to become broader transportation platforms that
connect consumers to e-scooters, electric bikes and local transit systems.
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Uber and Lyft are among the most prominent firms in the sharing economy,
which also includes home-sharing platform Airbnb, and highlight a trend away
from ownership to services.
– Risky business –
Lyft says it aims to play a growing role in the $1 trillion US transport
sector. But analysts point out that competition is growing and that any
investment may be risky.
Lyft lost $911 million on $2.2 billion in 2018 revenues. The documents show
revenues grew sharply from $343 million in 2016, but losses widened as well.
Analyst Richard Windsor, who writes the tech blog Radio Free Mobile, argues
that Lyft may not be ready for the scrutiny it will face as a publicly traded
firm.
“Lyft is shooting itself in the foot by going public, as I continue to
think that the company is not ready for the harsh glare of the public market
and it is giving away a big edge that it could have had over Uber,” Windsor
writes.
“A big hit (to) the share price can cause a loss of confidence in the
product triggering a vicious death spiral. This ties the hands of the
management in terms of the actions it can take and will make it harder to be
nimble, flexible and to compete against Uber.”
Ives of Wedbush Securities said Lyft may benefit from the missteps of Uber,
but that it may face a rocky road with the emergence of Waymo, the former
Google car unit which is launching its autonomous taxi service.
“Lyft is an attractive name to own to play this transformative ridesharing
market opportunity,” Ives said in a note to clients, while adding that “we
find it hard to be bullish on the name given the risk/reward we see for
shares.”
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