Lyft Sells All IPO Shares, Could Boost Valuation

Lyft has sold all of its planned IPO shares, leading analysts to raise their target price for the ridesharing company.

As a result, the company may also strive for a higher valuation than the almost $23 billion it suggested last week when it launched its investor road show.

In New York on Thursday (March 21), Lyft co-founders Logan Green and John Zimmer and chief financial officer Brian Roberts answered questions in a room that held around 400 bankers and investors. Repeated queries included when the company will turn a profit, if it is in a price war with rival Uber, and the regulatory issues ride-hailing companies face in cities like New York, according to The Financial Times.

“Their answer is it does [become profitable], but we’re going to invest, so don’t assume it for a while. They’re asking people to make a longer-term bet,” an investor who attended the event said.

Ishay Levin, an analyst at Baron Funds who attended a meeting, added, “It takes time to understand the competitive market beyond today. The question is what the market will look like in five or ten years and the impact on Lyft, and what is the sustainability of the business in terms of cash generation.”

The interest in Lyft should boost the number of shares it sells or raise the price of its shares. And its success is good news for Uber, which plans to kick off its own IPO next month.

Tom White of D.A. Davidson issued a buy recommendation and set a target price of $75 a share for Lyft.

“We very much think Lyft is the ridesharing company with all the momentum in the US at the moment” based on market share gains, he said. Lyft has revealed that its U.S. market share rose to 39 percent in December from 22 percent two years before.

“The growth rate at Lyft and the size of the market makes that valuation pretty reasonable,” he added.

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