Lyft expects to raise $2 billion before launch of IPO
The rideshare app wants to raise $2.1 billion in its stock offering.
Lyft’s IPO is off to a high-profile start in its IPO launch. Lyft wants to raise $2 billion for its initial public offering(IPO) and the stock is valued between $21-23 billion.
Lyft IPO details
Lyft’s unicorn IPO worth more than $1 billion has been under a lot of scrutiny since the rideshare company filed for an IPO in early March. The company is on an investor road show to get more funding for its stock offering. Lyft will have its share price between $62-$68. JP Morgan Chase and Jefferies are leading the stock offering.
Co-founders John Zimmer and Logan Green will hold less than 50% of shares. There will be a dual class structure to the stocks, similar to Levi's IPO. One class of shareholders will have 20 votes per share, while another class will have one voter per share.
Stock will be offered to salaried employees and to long-term drivers. The drivers can get stock options or a cash bonus.
Is Lyft’s IPO worth $2 billion?
Lyft made $2 billion in revenue in 2018, but also has massive debt. The carsharing app reported $1 billion in losses last year. When the company filed for an IPO, the corporation admitted that it will continue to have extensive expenses.
‘Our expenses will likely increase in the future as we develop and launch new offerings and platform features, expand in existing and new markets, increase our sales and marketing efforts and continue to invest in our platform,' said Lyft.
'These efforts may be more costly than we expect and may not result in increased revenue or growth in our business,’ said Lyft in its IPO filing.
Lyft’s IPO may be worth billions, but could also face additional scepticism from investors. Noted investor, Robert Frasier, said that he wouldn’t invest in Lyft since its hasn’t set itself apart enough its rival, Uber. While Lyft operates in just the US and Canada, Uber is in 60 nations.
‘With Lyft there aren't many parts that lend themselves to a buy recommendation. They have little to no competitive advantage against their much larger competitor Uber. And, they don't have defensible technology to compete against companies like GM, Ford and Tesla,’ said Frazier.
Frazier is also unsure if Lyft’s roadshow will change his mind about investing in the rideshare company.
‘Lyft's roadshow presentation might change my mind, but absent a plan to make money while still paying drivers, Lyft is not a compelling investment,’ said Frazier.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets