One of the tech industry’s largest Initial Public Offerings (IPOs) is entering the public markets on Friday, with share prices exceeding expectations from analysts and the excitement around the company grows. Ride-sharing giant Lyft is the first of several Silicon Valley companies set to enter the market, listing on the NASDAQ under the ticker “LYFT” on Friday. With share prices set at $72 per share, raising over $2 billion and valuing the company at $24 billion, this would mark the largest US technology listing in two years.
In comparison, analysts had previously estimated the ridesharing company’s target price at around $62 to $68 per share. Overall, the ambitious $72 per share price is at the high end of a revision the company made after aggressive investor demand surprised the company.
The San Francisco company still hasn’t seen any profit since it was founded back in 2012. The company’s management team has acknowledged that it will likely be many more years before it will see a profit. However, that hasn’t discouraged potential investors, especially since it’s common for major tech companies to pursue aggressive growth strategies at the expense of shareholder profits.
“Now that ride sharing has become more mainstream, we believe that users are increasingly choosing a platform based on brand affinity and value alignment,” John McNeil, Lyft’s COO, said in a promotional video released this month for the company’s investor roadshow according to CNN. “Our values, brand, innovation and focused exertion have driven significant growth in market share and in the number of users on our platform.”
Overall, Lyft’s IPO is set to usher in what could be an exciting few months for tech IPOs as other major companies. Lyft’s number one competitor, Uber, is planned to begin its IPO process next month and hopes to list sometime late 2019. Overall, it will seek a valuation of over $100 billion, dwarfing its smaller competitor. At the same time, more tech IPO’s coming in the future include both image-sharing platform Pinterest as well as workplace messaging service Slack, while short-term rental website Airbnb, as well as data analytics group Palantir, are speculated at beginning the listing process sometime next year.
“Market sentiment and investor sentiment for such growth assets is as good as it’s ever been,” said Rohit Kulkarni, head of research at Forge, according to The Financial Times. “These are the most anticipated IPOs in Silicon Valley.” Another investment analyst, Ian Wallis and co-founder of UK investment firm Star Tech NG, added that “There is an appetite for tech because people recognize these companies are defining and leading global megatrends.”
While prospects for the company remains strong as the ride-sharing trend continues to take over the existing taxicab industry, much of these ride-sharing companies success rides on being able to classify their drivers as independent contractors, as opposed to full-time employees, which would them to extend a variety of benefits to these drivers. However, this has been the source of ongoing legal battles. This classification means that Lyft won’t need to give any shares to drivers before the IPO as opposed to there employees who are expected to reap a substantial amount on Friday.
When Lyft shares finally go live on Friday, it’s likely that shares will surge dramatically, potentially breaking the $80 per share price point as a result of the excitement.