Lyft’s losses are largely due to its costly battle for US market share with Uber. Lyft spent $800 million on revenue and advertising to attract new drivers and riders. An additional $540 million was spent by the company on driver, rider, and passenger incentive programs annually, which it deducted from annual revenue.
Lyft began trading on the Nasdaq now (March 29), kicking off what promises to be a big season for money-losing consumer tech startups.
Uber is anticipated to unveil its IPO filing and start its own investor roadshow in April, meaning it could hit the public markets soon after Lyft.
Lyft is the first of more than a dozen technology startups expected to complete offerings . Workplace messaging agency Slack, and firm Postmates, online mattress retailer Casper have all filed paperwork . Pinterest and zoom created their filings public on March 22.
The company had initially sought an IPO price of between $62 and $68 a share, but was able to grow the range following the deal reportedly filled up at the first two days of its investor roadshow.
Investors in this year’s wave of IPOs will need to decide how comfortable they’re betting on companies that have yet to prove that they could earn money. Lyft lost $911 million in 2018–generally, $1.47 per trip –and has never turned into a quarterly gain. Despite raising nearly $ 5 billion in venture capital since it was founded in June 2012, that ’ s.
It s unclear what Lyft intends to alter to reverse those declines in the near future, and Uber appears unlikely to bow from the united states. Long term, Lyft, like other companies in the industry that is ride-hail, is banking on mass deployment of autonomous vehicles by removing the main cost — the driver, to make its business more profitable.
Chief Lyft rival Uber is chronically unprofitable, turning its first and thus far only quarterly gain in the first quarter of 2018 thanks. Uber dropped a combined $2.8 billion in the other 3 quarters of 2018.
By early afternoon, Lyft’s initial sugar was already starting to wear off, together with the stock trading about $80–an 11% profit over the IPO price.
Lyft’s stock opened up 21 percent over its asking price at $87.24 soon before noon US Eastern time. The day-one “soda ” is typical for technology startups but doesn’t always. Snapchat parent company Snap, as an example, jumped 40% from the gate when it debuted on the New York Stock Exchange at March 2017 and finished the afternoon at about $24. The firm ’s stock price has been cut in half, now trading at under $11.