Lyft expects to raise $2 billion before launch of IPO

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.