Author: Michael J. de la Merced and Kate Conger / Source: New York Times
Ramin Talaie for The New York Times
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 proved enormous.
The company 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 begin trading on the Nasdaq stock market on Friday, under the ticker symbol LYFT.In total, the company raised about $2.3 billion, having also increased 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.)
The offering marks the arrival of a new generation of Silicon Valley darlings on the public markets. Many of the companies promised new business models, upended established industries such as transportation and triggered a chain effect on how people work and make a living. The public offerings cement the place of the companies in people’s lives, promise millions of dollars in investment gains for their longtime backers and are set to unleash a new wave of wealth in the tech industry.
[Lyft’s shares soared on Friday when it began trading on public markets.]
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 digital pin board company Pinterest, 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 bodes 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 unlikely to turn a profit for years, are being valued too highly 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. prices.
In its offering prospectus, Lyft revealed that it 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…
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