Lyft Prices I.P.O. at $72 a Share, Marking Arrival of Gig Economy to Wall Street
Lyft was not the first ride-hailing company. But it is poised to become the first publicly traded one, and investors’ appetite for its shares proved enormous.
The company priced its shares at $72 each on Thursday, after raising its price range amid significant demand from prospective shareholders, according to two people familiar with the offering. That puts Lyft’s value at $24.3 billion as it prepares to begin trading on the Nasdaq stock market on Friday, under the ticker symbol “LYFT.”
The offering marks the arrival of a new generation of Silicon Valley darlings on the public markets. Many of the companies promised new business models, upended established industries such as transportation and triggered a chain effect on how people work and make a living. The public offerings cement their place in people’s lives, promise millions of dollars in investment gains for their longtime backers and are set to unleash a new wave of wealth in the tech industry.
Among those set to follow in Lyft’s footsteps is its archrival, Uber, whose initial public offering in the next few months is expected to be the biggest in years. Others on the docket include the digital pin board company Pinterest, the messaging platform Slack and the delivery service Postmates, all of which are betting that they will also gain enthusiastic backing from investors.
But some investors worry that these companies, awash in red ink and likely unable to turn a profit for years, are being valued too highly and could ultimately disappoint their new public-market backers. Some companies that went public while running big losses, including Groupon and Snap, now trade well below their market debut prices.
In its offering prospectus, Lyft recently revealed that it lost close to $1 billion in 2018. Lyft and Uber regularly lose money in their competition to win new markets, where they spend amply on subsidies for riders and drivers. The companies also burn cash on other transportation initiatives, like bikes, scooters and autonomous vehicles. Last year, Lyft bought the largest bike-sharing company in the United States for around $250 million.
At its I.P.O. price, Lyft’s valuation puts it within range of old-line auto companies like Ford Motor. It is a significant increase from the $15.1 billion that Lyft earned in its last private fund-raising round last year.
Over the past week and a half, Lyft executives and their bankers have embarked on a roadshow that took them from New York to Kansas City to San Francisco, pitching their business to institutional investors. Lyft initially set a price range of $62 to $68 for its shares, before raising that range on Wednesday to $70 to $72 a share. .
The offering’s success will bring windfalls for Lyft’s biggest existing investors. Among them: the company’s founders, Logan Green and John Zimmer, who are poised to become multimillionaires; Rakuten, the Japanese e-commerce giant, and venture capital firms like Andreessen Horowitz.
Though Mr. Green and Mr. Zimmer have taken their company public, they will still retain control, following in a long tradition of founder-led technology businesses. The two own special holdings that give them nearly 49 percent of voting shares, despite owning less than 5 percent of the overall stock.