49°F
weather icon Clear

Lyft IPO succeeds as investors take chance on ride-share company

Lyft’s shares soared as the company went public Friday, giving investors their first chance to bet on the future of the ride-hailing industry.

The stock opened at $87.24, up 21 percent from its offering price of $72. Lyft won the race with its much larger rival Uber to go public, and the debut marked the first time most people who have used their smartphone to summon a car through Lyft or Uber can take their chances on whether the ride-hailing phenomenon will continue to transform transportation and become a money maker.

Lyft raised its target price from its initial range of $62 to $68 over the course of the last week as investors clamored to get in on the action, despite the company’s history of losses.

In a sign of how ride-hailing giant Lyft has changed the way we think of transportation, Lyft executives celebrated the company’s stock market debut from the inside of a former car dealership they plan to convert into a center for their company’s drivers.

Co-founders Logan Green and John Zimmer talked about their early vision of the company and their commitment to providing alternatives to individual car ownership.

“In 2012 we launched Lyft, and pioneered the idea of on-demand peer-to-peer ride-sharing,” said Green, who is also the CEO, at an event in Los Angeles Friday. “In those early days we were told we were crazy to think people would ride in each others’ personal vehicles. And now, after more than 1 billion rides, we’re able to look forward to a world we’ve long imagined, designed less for cars and more for people.”

In afternoon trading, the price hovered around $80, which would give Lyft a $27 billion valuation.

“Lyft is popping the Dom Perignon today but how the stock trades over the coming months and especially once Uber comes out and goes public will be the real test,” said Wedbush Securities analysts Daniel Ives.

Lyft also said it ended up selling 32.5 million shares in the offering, above the nearly 31 million that it had targeted in its regulatory filings leading up to Thursday evening’s pricing.

“Without question, investors are looking beyond operating losses to the potential upside,” in the ride-hailing industry, said Alejandro Ortiz, an analyst for SharesPost.

The IPO raised more than $2 billion to use in its heated competition with Uber to woo riders. Uber is expected to make an even bigger splash when it completes its IPO later this year.

Investors embraced Lyft despite an uninterrupted history of losses totaling nearly $3 billion since its 2012 inception on the premise that its growing popularity will pay off in the long run.

“Lyft has been successful against big odds because we have always prioritized the long term sustainable growth of both our community and our company,” said John Zimmer, president and co-founder. “Business results and societal impact are not only linked, but they can and do feed off each other. We know the road ahead comes with both massive opportunities and genuine challenges.”

Lyft said Friday it will invest $50 million annually, or 1 percent of profits — whichever is greater — in transportation initiatives in cities. The investments will include free or discounted rides for medical patients and low-income seniors and developing infrastructure for bikes, scooters and transit.

Don't miss the big stories. Like us on Facebook.
THE LATEST
NSHE approves long-term contract with NV Energy

The Nevada System of Higher Education board of regents has agreed to a multiyear agreement with NV Energy that’s expected to save the state government unit about $380,000 an annual energy costs statewide.

266K jobs added in Oct.; unemployment falls to 50-year low of 3.5%

The unemployment rate declined to 3.5% in October, matching a half-century low, the Labor Department reported Friday. And wages rose a solid 3.1% in November compared with a year ago.