The pink-mustached unicorn just made its debut in Wall Street on the Nasdaq Friday with pink confetti raining all over. The roadshow event was hosted at Lyft’s largest market, Los Angeles.
The second largest ride-hailing company next to Uber made an impressive initial listing with a 21% pop at $87.24 a share from the initial $72 a share proposal a week before their roadshow event.
They were able to sell 32.5 million shares at $72 a piece, raising $2.34 billion from investors making the company’s total value at around $24 billion.
Lyft’s first day of trading went as high as $96.84 a share and as low as $75.49 a share before finally setting at $87.24 before the trading day ended at 10% increase.
However, Lyft announced its IPO after losing $900 million in 2018, the biggest loss for any startup ever before going public. But it was still able to manage to profit in terms of revenue up to a total of $2.2 billion, some of the highest ever of any company before going public.
The company took $8.1 billion in bookings last year and its network covers 30.7 million riders and 1.9 million drivers.
The ride-hailing company is now set to focus on profit-making to keep their good opening at Wall Street rolling.
“We are confident that the business will be very profitable,” Logan Green, co-founder of Lyft, said in an interview with Bloomberg TV. “We are making tremendous progress going after this once-in-a-generation shift where this entire industry, a $1.2 trillion market, could flip from an ownership model to a service model and we are leading the way there.”
“We want to make a point that you can both invest in communities and build a great business,” John Zimmer, co-founder of Lyft, added. “It was fun to ring the bell with several members of our driver community and have many of them participate in our IPO because we gave them a bonus to do so.”
For the case of Lyft’s backbone, their drivers, it is still unsure what would happen to them with the latest IPO announcement.
Just this week drivers for both Lyft and Uber organized a strike in Los Angeles over recent pay cuts.
With grab hailing companies, the drivers are basically what keeps these companies afloat.
A Stanford University study examining the Uber driver gender pay gap noted that more than 60% of drivers across the country quit after 6 months.
Lyft will need to consistently gain and maintain its drivers in order to not feel the need to raise fares for their customers. In relation to this, Lyft offered incentives to their drivers who meet certain set goals–$1,000 for 10,000 trips or $10,000 for 20,000 trips. They also had the privilege of investing their incetives as stock ahead of the IPO until last Thursday.
“The driver is the face of the brand,” says Arun Sundararajan, a professor at New York University’s Stern School of Business. “The entire experience is controlled by the person whose car you get into — if they’re projecting, ‘I’m underpaid and unhappy,’ that’s not going to be a good experience.”
But the company is also looking forward to self-driving initiatives that would most likely start in 5 years, probably more or probably less, which they hope will turn out as a success in order to mitigate driver-related concerns.
Lyft’s major hurdle right now is being able to maintain their drivers and market towards even more riders and drivers to join their ride-hailing arsenal.
On the other end, they will have to continue facing Uber. their only advantage, as of the moment, is their focus on a shared driver experience unlike with Uber, whose also have their sights with food deliver and other services. Although Uber still has the leg up because of their earlier start, with wider networks and audience reach.
Uber also had successful mergers with Grab that would eventually increase its network across different regions of the world. They are also in talks with Middle East’s Careem.
Other Unicorn Startups
Lyft set the stage for how we will be expecting other major startup companies are going to fair with their IPO announcements set this year. Lyft alone was a major public listing that we have been waiting for quite sometime now.
On the other end, Lyft’s primary competitor Uber is set to go public this April too. With its current rate, Uber is valued at around $70 billion on the private market, making it the most highly valued US startup in the world. It could reportedly fetch a valuation of as high as $120 billion in its Initial Public Offering.
We will also be looking forward to other companies like Pinterest and Airbnb who is set to go public too in 2019.