BREAKING NEWS

Lyft shares soar on Nasdaq debut, setting stage for Uber

By REUTERS

MARCH 29, 2019 21:43

LOS ANGELES/NEW YORK - Lyft Inc's shares opened up more than 20 percent in their market debut on Friday, giving the ride hailing startup a market value of more than $27 billion, amid strong investor demand that bodes well for larger rival Uber Technologies Inc.

Lyft's IPO, which is this year's biggest thus far, sets the stage for other Silicon Valley unicorns seeking to debut in the stock market this year, including Pinterest Inc, Postmates Inc and Slack Technologies Inc.

The success of the IPO came despite Lyft's steep loses, criticism of its dual-class share structure and some concerns over its strategy for autonomous driving, for fear of missing out on the company's strong revenue growth.

"There's money that wants to be invested into tech. This is a new area and people are definitely interested in exploring it," said Catherine McCarthy, an Allianz research analyst.

On Thursday, Lyft priced 32.5 million shares, slightly more that it was offering originally, at $72, the top of its already elevated $70-$72 per share target range, raising $2.34 billion in its initial public offering.

The stock opened at $87.24. By the afternoon, the stock had pared gains to trade up 11 percent at $80.20.

Lyft's offering ended up 20 times oversubscribed, similar to other high-profile IPOs, with more than 500 orders from institutional investors such as mutual funds placed, according to people familiar with the matter.

"Unless you're a closet indexer, you are sitting looking at this as potential alpha for your returns," said David Ethridge, U.S. IPO services leader at PwC.

Despite the optimism, there are some concerns that these tech IPOs may be coming at the peak of the market, when the benchmark S&P 500 Index has risen more than 200 percent since 2008.

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