Ride-hailing service provider Lyft’s shares rose as high as 23% in its market debut on Friday, as investors showcased strong demand for the company’s shares.
This highly successful debut of Lyft not only makes it the year’s biggest IPO thus far, but also sets the stage for other Silicon Valley unicorns like Pinterest Inc, Postmates Inc and Slack Technologies Inc. seeking to debut in stock market this year.
Lyft’s shares reflect investors’ zeal to explore technology. On Thursday, Lyft priced 32.5 million shares, slightly more than it was offering originally, at $72, on top of its already elevated $70-$72 per share target range, raising $2.34 billion in its initial public offering. Its stock opened at $87.24 but later cut back on gains close up 8.7% at $78.29, giving Lyft a market capitalization of around $22.2 billion.
Even though Lyft’s subscriptions have grown with more than 500 orders from institutional investors, certain concerns still need to be addressed.
Despite revenue doubling in 2018 to $2.16 billion, Lyft’s losses rose from $688 million in 2017 to $911 million last year. Profit is a metric that motivates investors to take risks in business. The same applies to Uber, which is also still a loss-making company.
It is believed that these companies’ losses come from subsidizing rides, a tactic to attract riders with discounts. Despite Lyft’s steep loses, criticism of its dual-class share structure, and some concerns over its strategy for autonomous driving and new laws aimed at increasing driver pay.
The company’s Chairman confirmed that Lyft will continue to focus on its North American growth over international expansion after the completion of its IPO.
The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an uptrend is expected.
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
a provider of online social rideshare community platform
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