Lyft IPO oversubscribed on road show's second day: report

March 20, 2019 09:11
Ride-hailing services firm Lyft is said to have drawn enthusiastic response from investors during the marketing road show for its IPO. Photo: Reuters

Lyft's initial public offering (IPO) has been oversubscribed based on commitments made so far by investors, making it more likely that the ride-hailing startup will fetch or even exceed the US$23 billion valuation it is seeking, Reuters reports, citing people familiar with the matter.

Lyft started its IPO road show on Monday and has spent the last two days meeting with investors in New York.

The company has set an indicative IPO price range of US$62-68 per share and is set to price the IPO on March 28.

Though the exact level of oversubscription is not known, the enthusiastic response from the market suggests many investors are willing to overlook uncertainty over Lyft’s path to profitability for fear of missing out on the most high-profile technology IPO since Snap's 2017 offering, the report said.

Lyft’s progress in its IPO could bode well for larger rival Uber Technologies, which is expected to kick off its IPO in April. Uber has been valued by investment bankers at as much as US$120 billion.

Lyft said on Monday that it aims to raise up to US$2 billion in its IPO at a fully diluted valuation of as much as US$23 billion, which includes restricted stock.

There will be more meetings in Boston and New York this week between investors and co-founders Logan Green and John Zimmer, as well as Chief Financial Officer Brian Roberts and Catherine Buan, vice president of investor relations.

Lyft is pitching investors on the simplicity of its business, while Uber is expected to play up its more diversified strategy, according to Reuters sources.

Both Lyft and Uber have yet to turn a profit, with Lyft reporting a loss of US$911 million in 2018, wider than its US$688 million loss in 2017.

In meetings with investors this week at a hotel in New York, Lyft executives said the company would be profitable much sooner were it not for investments in areas such as its scooter business.

The executives also said they expect the costs of processing transactions to come down, according to the Reuters sources.

-- Contact us at [email protected]