On 29th March, the San Francisco based ride-hailing company, Lyft, went public on NASDAQ in New York, with an initial public offer of $72 per share. The price exceeded 8.7% by the end of the first day, reaching $78.89. Throughout the day, shares traded in a $78.02-$88.60 band, which was an undeniable success for the company. The IPO raised $2.3bn, now valuing a total of $24bn, including also the restricted shares and the ones allocated to the employees. The company made a bold move, since this was the biggest US IPO of 2019 to date, and also the largest US technology IPO since Snap in 2017. The two co-founders, Logan Green and John Zimmer, announced that their decision was the result of the company’s readiness, rather than the Wall Street enthusiasm. Mr. Zimmer, the president, told in an interview to the Financial Times that: “It happened to be that this is a good moment in the market to do so”. Even though they now own less than 5% of the company, the structure of the shares allows Zimmer and Green to control a little bit less than 50% of the votes.  

Despite the triumph of the first day, on Monday, April 1st, the share price dropped by almost 12%, being lower than the initial offer and reaching $69.01 at closing time. Some of the investors cashed out after just one business day, as questions about the profitability arouse. The fast decline in share price may be a sign of decreasing interest in fast-growing, yet unprofitable, tech companies. Dan Ives, an analyst for Wedbush Securities, said: "For a tech IPO like this to trade below its list price on its second day is not ideal". However, other companies like Facebook, Twitter, and Alibaba also had drops in their share prices on the second day after going public. The enterprise is growing very fast, doubling its revenues in 2018 and reaching $2.15bn. Despite this, it is still losing money ($911m last year), although almost 50% less than Uber ($1.8bn in 2018). The two companies relied on venture capital to subsidies fares, Uber raising up to $24bn in equity and debt, compared to Lyft which only raised less than $5bn as a private company. Lyft’s main goal is to replace private cars with shared – and eventually autonomous – ones: consequently, the high research and technology-related cost are covered by investors’ money, who started to doubt the profitability of Lyft. Specialist predicted that the company may become profitable by 2022 if they cut down research and marketing costs. Over the past 5 sessions, the S&P 500 is up 2.2%, while Nasdaq is up 2.8%, which gives Lyft an advantage. 

Lyft was the first one among the new tech-giants to go public, which created uncertainty among companies such as Snap, Airbnb, Pinterest, and Uber, which plan to go public in the near future. They are now watching closely since the high value of Lyft's IPO increased their hopes for the future listings. It's main competitor, the largest so-called unicorn of all, Uber, is believed to go public as soon as next month, some close sources revealed. Most investors believe it has chances to be valued at more than $100bn and achieve the title of one of the biggest public offerings in the history of corporate US. Compared to Lyft, which focuses only on the US, Uber has a global approach and was diversified a lot in the past few years (from food delivery to car sharing). Analysts and investors are confident that, after both Lyft and Uber are public, they will stop the aggressive price war, which will lead to profitability shortly after. 

The first week after the public offer was a bumpy ride for Lyft, with share prices changing every day. In conclusion, we cannot exactly predict the future of Lyft after just one week on the stock exchange market, but it is already clear that its future profitability is investors’ main concern.

Ana Cosniceru