Lyft is deeply unprofitable - but that isn't stopping eager Wall Street investors

Lyft is deeply unprofitable - but that isn't stopping eager Wall Street investors

As reported by CBS, Lyft was aiming for an initial price of $72 per share. Uber said last month that it lost $1.8 billion in 2018. As The New York Times reports, the price makes it one of the most valuable American companies to go public in the last decade.

All eyes were on Lyft Friday morning as investors rushed to get a piece of the first big US technology listing of the year.

The company has for years been an underdog in the fast-growing ride-hailing business and has been famous for the hot pink fuzzy mustaches drivers have been attaching on their cars' bumpers besides the friendly fist-bumps drivers were asked to greet riders.

In an unusual move, Lyft founders Logan Green and John Zimmer joined other execs to kick off their Wall Street debut at a former vehicle dealership in Los Angeles, thousands of miles from the Nasdaq. "They could increase revenue by charging more, but that won't be a good thing for passengers, or they could cut the fares for drivers, but that will cause drivers to quit and degrade the service". While Lyft and its bigger rival, Uber, filed for their IPOs at around the same time in December, Lyft has made it to the exchange first.

Thursday evening, Lyft raised about $2.3 billion before its debut on the NASDAQ.

Lyft had little trouble getting investors to hop on board its increasingly popular ride-hailing service, as its initial public offering fetched a $72 United States per-share price that exceeded even its own expectations. The shutdown of the federal government shuttered USA agencies that review IPO plans, and this must have delayed the rush of 2019 activities but the Lyft case has shown there is heightened enthusiasm for more offerings that are likely to come.

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John Zimmer, Lyft's president and co-founder, says the road ahead comes with massive opportunities and genuine challenges.

Lyft and Uber drivers have tried - and failed - on multiple occasions to be reclassified as full-time employees instead of freelance workers.

Lyft however kept their focus only on consumer transportation. Others tech companies such as Airbnb, Slack, Pinterest, Postmates, and more are also readying to go public. Lyft doubled its revenue past year to almost $2.2 billion - another feat that likely lured investors to the IPO.

Despite no near-term profitability in sight for Lyft, its IPO received an overwhelming response. "It creates an appeal for investors who want to get in on the ride-share economy without resorting to the scandal-ridden Uber", Blankenship said. "Right now they both have the chance to become that, and the next decade as publicly-traded companies will help determine who does".

Green, 35, owns a stake now worth $656 million and Zimmer, 34, owns a stake worth $452 million. On the other hand, it has the largest revenues of a pre-IPO company behind only Google and Facebook. The investments will include free or discounted rides for medical patients and low-income seniors and developing infrastructure for bikes, scooters and transit.

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