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 has been enormous.
The company has been priced its shares at $ 72 each on Thursday after raising its price range amid significant demand from prospective shareholders. That puts Lyft's value at more than $ 24 billion as it prepares to start trading on the Nasdaq stock market on Friday, under the ticker symbol LYFT
In total, the company raised about $ 2.3 billion, also increasing the number of shares that were sold. (That amount could grow if Lyft's underwriters sell an additional block of shares to meet even stronger-than-expected investor demand.)
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 Pinterest digital pin board company, the messaging platform Slack and the delivery service Postmates, all betting that they will also gain enthusiastic backing from investors
"The strong demand for Lyft certainly points well for other unicorns, "Said Jay Ritter, a professor at the University of Florida's Warrington College of Business, using a term for start-ups valued at $ 1 billion or more.
But some investors worry that these companies, awash in red ink and it is unlikely that turn and profit for years will be valued too high 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 I.P.O.
In his offer prospectus, Lyft revealed that he has 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 transport initiatives, such as bikes, scooters and autonomous vehicles. Last year, Lyft bought the largest bike-sharing company in the United States for about $ 250 million.
"With Lyft, obviously, the market is saying, 'We are willing to give you the benefit of the doubt on a lot of things, 'given that there are huge uncertainties about its future,' Mr. Ritter said.
At his I.P.O. price, Lyft's market value puts it within range of old-line auto companies such as Ford Motor.
Over the past week and a half, Lyft executives and their bankers 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 and a range of $ 62 to $ 68 for its shares before raising that range on Wednesday to $ 70 to $ 72. The offer was led by JPMorgan Chase and Credit Suisse.
Between 2001 and 2018, I.P.O.s that were priced above their initial range averaged a return of 37 percent, Mr. Ritter said
But Lyft must now prove that it is worth the eye-popping valuation bestowed upon it by its new public-market investors. That's the reason why it's going to be a profit, and that it's more than doubled its revenue in 2018 – while showing that its focus on transport, rather than branching out into ever-more business lines like Uber has, can be lucrative
will bring windfalls to Lyft's largest existing investors. Among them: the company's founders, Logan Green and John Zimmer, who are poised to be worth hundreds of millions of dollars; Rakuten, the Japanese e-commerce giant; and Andreessen Horowitz.
Though Mr. Green and Mr. Zimmer takes their company public, they will still retain control, following a long tradition of founder-led technology businesses.
Lyft also plans to give cash bonuses to drivers who have completed a large number of rides for the company, so they can buy shares at IPO price. Drivers with 10,000 rides will receive $ 1,000, which at $ 72 would allow them to buy 13 shares before taxes. Drivers who have finished 20,000 rides will receive $ 10,000
Only full-time drivers who have been with the platform for several years are likely to make the cut, said Harry Campbell, an Uber and Lyft driver who runs the blog and resource driver site The Rideshare Guy
"It was the right thing to do," he said of Lyft's cash bonuses for drivers. "If you gave 10,000 rides for Lyft, you were a big part of helping build this company." He added that the I.P.O.
Unlike Lyft's employees and early investors, who are restricted by a period of locking from selling their shares, drivers will be able to sell any Lyft stock purchased through the cash bonus program as soon as the company starts trading on the public market, according to an email sent to qualifying drivers and reviewed by The New York Times
But the cash bonuses did not satisfy many drivers who worked as freelancers for Lyft and Uber and do not receive full-time employee benefits. This week, hundreds of them protest in San Francisco and Los Angeles against lower pay rates.
"If political will begins to shift against Uber and Lyft, that's a scary proposition." Campbell said.