Lyft IPO makes it the ridesharing star, at least for today

Lyft valued at $34.3b in first ride-hailing IPO

Lyft exceeded market expectations with its initial public offering (IPO) on Thursday, raising $2.34 billion and fetching a valuation of $24 billion.

The market's blockbuster quarter shared the spotlight with Lyft's much-anticipated trading debut on the Nasdaq stock exchange.

Shares opened Friday morning at $87.24 - 21 percent above the IPO price of $72 - and drifted downward in the afternoon, closing up 8.7 percent to $78.29 in NY.

Lyft's co-founders Logan Green and John Zimmer have structured the shares so that together they will hold 49 percent of the voting power, enough to substantially influence major decisions.

In an unusual move, Lyft founders Logan Green and John Zimmer joined other execs to kick off their Wall Street debut at a former vehicle dealership in Los Angeles, thousands of miles from the Nasdaq.

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"Our mission is to improve people lives with the world's best transportation, and today we are taking Lyft public", said Co-founder and Co-CEO John Zimmer.

As a result, the IPOs of Lyft and other loss-making unicorns present a predicament for investors sitting on the fence-they do not want to miss out on popular companies with fast growth, but must weigh the risks of businesses with unproven economics. More than 71 million shares changed hands as investors sought out or sold shares in the stock market.

Interestingly, Tech Crunch notes that Lyft has the largest net losses of any pre-IPO business, posting losses of $911 million on revenues of $2.2 billion previous year.

And when you consider that many investors do overlap in tech categories, such as ride-share apps, the likelihood of swaying potential Uber investors to Lyft increases.

For the case of Lyft's backbone, their drivers, it is still unsure what would happen to them with the latest IPO announcement. According to its filing, Lyft's share of the U.S. ride-hailing market spiked to 39% in December 2018 from 22% at the end of 2016.

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Lyft's branding as a warmer, more caring alternative to Uber dates back to its launch in 2012.

Lyft's revenue was $2.16 billion for 2018, double the previous year's and far higher than $343 million in 2016.

"Nobody knew they (Lyft) would catch up to this level", said Navin Chaddha, a venture capitalist with Silicon Valley firm Mayfield, which invested in Lyft in 2011.

On the other end, Lyft's primary competitor Uber is set to go public this April too.

Lyft raised $2.34 billion its IPO.

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Signage for Lyft is seen displayed at the NASDAQ MarketSite in Times Square in celebration of its initial public offering (IPO) on the NASDAQ Stock Market in New York on March 29, 2019. With its current rate, Uber is valued at around $70 billion on the private market, making it the most highly valued U.S. startup in the world.

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