Lyft hikes IPO price range ahead of high-profile Nasdaq debut

Ride-share company Lyft Inc, which is Uber’s closest rival, raised its targeted price range to $70 to $72 a share, in a move that signals strong demand for its shares.

At the top of the new range, which was disclosed in a filing late Wednesday, the ride-hailing service would be valued at more than $23 billion. The tech unicorn was earlier expected to be priced at between $62 and $68 per share.

The San Francisco company is expected to price its shares Thursday after the market closes. The stock should start trading on the tech-laden Nasdaq under the symbol LYFT on Friday after a market clearing price has been determined.

READ: Lyft gets first Wall Street Buy recommendation ahead of listing next week

Last week, Lyft held a key investor meeting in a ballroom at the St Regis hotel in Manhattan and it was packed by more than 400 investors dying to write checks. Barely two days on the road marketing its IPO, and investors were informed that the Lyft listing is oversubscribed.

CNBC’s Jim Cramer said investors should expect high-growth technology stocks to be sold off as investment funds free up cash to buy into the wave of new initial public offerings.

“Because the Lyft deal will make these money managers so much more money, they’re desperate to raise cash for it,” said Cramer, who expects the price to go up to at least $75.

Cramer said the Lyft IPO was likely to surge, drawing investors back to the whole stock market.

“If they price this deal well and it pops right, you are going to find people come back to our market. … This will eclipse any talk about the yield curve,” Cramer said. “You want to get as much Lyft as you can.”

Cramer couldn’t help having a little fun with Lyft’s prospectus which he described as “Gandhi meets Lyft.” He said it “reads like a millennial prospectus,” as the “holistic” and “mindful” document details how cars hurt the environment.

The touchy-feely emotions aside, Lyft and other disruptive on-demand ridesharing companies have tapped deep into the millennial ziegeist by taking advantage of almost everyone having a smartphone.

Company’s financials

The San Francisco-based ride-hailing company’s filing lifted the hood on its financials. Lyft’s revenues doubled in 2018 to reach $2.2 billion, according to the contents of its S-1 registration with the SEC. That is up from $1.1 billion in 2017 and $343.3 million in 2016.

But like rival Uber, Lyft is hemorrhaging money. Its net loss climbed to $911.3 million in 2018 from two years of steady losses of $682.8 million in 2016 and $688.3 million in 2017.

“Since Lyft is losing a substantial amount of money it will take multiple years for revenue to increase enough and operating expenses to slow their growth for the company to become profitable,” wrote Chuck Jones in Forbes. 

Lyft claims its ridesharing market share grew to 39% in 2018, up from 22% in 2016. In the fourth quarter of 2018, it had 18.6 million active riders and 1.1 million drivers.

According to the Financial Times, more than 300 companies are ready to go public and want to raise as much as $50 billion.

Contact Uttara Choudhury at [email protected]

Follow her on Twitter: @UttaraProactive 

Story by ProactiveInvestors