Shares of ride hailing company, Lyft, the first big initial public offering of the gig economy era, started trading on Nasdaq Stock Exchange on Friday.
Wired reports that the ride hailing company priced its shares at $72, and they quickly jumped as high as $87.24. By market’s close, the stock had retreated to $78.29—still a gain of 8.7 percent from the IPO price.
That gives the company Lyft a $26.4 billion market cap, larger than many other transportation companies, including United and American Airlines, Hertz, and Avis.
On one hand, the market’s enthusiasm for the company’s IPO (which was reportedly oversubscribed) lays the groundwork for other tech IPOs including, Lyft rival, Uber, Airbnb, and Pinterest.
Uber, was last valued in an August 2018 private financing round at $76 billion, and it might seek a $120 billion valuation when it files for IPO. The larger ride hailing company has reportedly filed its initial paperwork to go public.
Yet neither of the two big ride hailing companies has publicly outlined a path toward profitability.
Lyft’s initial filing with the US Securities and Exchange Commission, in early March, tells a different story about the company, which is pulling in plenty of money but struggles to arrest its losses.
Lyft’s ridership has grown dramatically in the past two years, from 6.6 million at the end of 2016 to 18.6 million at the end of 2018. The company estimates that 9 percent of the US adult population has taken a Lyft ride. It also says its year-over-year increase in riders hit 47 percent in December. That’s a lot of growth.
Lyft is also giving more rides than ever, jumping from 52.6 million at the end of 2016 to 178.4 million at the end of 2018. And the company doubled its revenue in 2018, to $2.2 billion, from $1.1 billion a year earlier.
But Lyft’s costs and expenses are growing, too. Last year, for example, the company spent $804 million—nearly twice what it did in 2016—on sales and marketing to new riders and drivers.
As a result, Lyft’s losses are widening, reaching $911 million last year. Uber self-reported an adjusted loss of $1.8 billion in the same period. The companies’ dueling IPOs mean everyone will be watching as they try to turn it around.
