- U.S. ride-hailing giant set higher price for its shares
- Investors ignore growing losses
- IPO plans affected by federal government shutdown
Lyft Inc. started its IPO investor road show with a target price of between $62 and $68 but has created a frenzy by pricing the Initial Public Offering at $72 per share. The top-of-the-range hailing company is now valued at $24.3 billion after raising more than it had initially planned to do with investors overlooking uncertainty over its journey to becoming a profitable company.
Amid steep losses and criticism
According to March 29 Reuters report, Lyft outmaneuvered its principal rival Uber Technologies Inc., which is reportedly going to kick off its own sale in April, in the race for the capital markets after filing for the IPO earlier this month. Lyft’s successful venture has happened amidst the firm’s steep losses, criticism about its dual share structure as well as concerns over its plan for autonomous driving for fear of missing out on their strong revenue growth.
The company has for years been an underdog in the fast-growing ride-hailing business and has been famous for the hot pink fuzzy mustaches drivers have been attaching on their cars’ bumpers besides the friendly fist-bumps drivers were asked to greet riders. Lyft’s shares are expected to list this Friday on NASDAQ under the ticker “LYFT” while the IPO is expected to close on April 12, 2019. Speaking before the pricing, Sageworks’ co-founder Brian Hamilton said:
“In a good market, people look beyond things. They don’t see the problems as much”
Biggest IPO so far this year
Potential investors have been on the upbeat since Lyft hit the road to market the IPO last week leading to an oversubscription of the offering within the first two days of the roadshow. The firm decided to raise its price range last Wednesday by as much as USD 2.2 billion and investors have already been advised to place orders above the elevated range to increase their chances of succeeding.
The listing, which has been hailed as the biggest IPO this year will help to rescue the first quarter of 2019 which has seen a cold start for U.S. Initial Public Offerings making it the worst year for listings since 2016. The shutdown of the federal government shuttered US agencies that review IPO plans, and this must have delayed the rush of 2019 activities but the Lyft case has shown there is heightened enthusiasm for more offerings that are likely to come.
As BR reported recently, the five-week federal government’s shutdown that started on December 22, 2018, affected agencies such as Commodity Futures Trading Commission (CFTC) and has resulted in the delayed regulatory approval for the highly-anticipated Bitcoin Futures. The delay which created a serious backlog at the CFTC and other government agencies is over, and there is renewed hope on the world of IPOs and crypto space as well.