Shares of the popular ride-sharing company increased 20 percent in the minutes after it started trading on the Nasdaq exchange
Lyft, America’s second-biggest ride-sharing company, made its Wall Street debut on Friday morning with a valuation pushing $30 billion after seeing its shares quickly increase 20 percent soon after trading, potentially signaling investors aren’t worried about its profitability concerns, at least for the time being.
The San Francisco-based company, known for its trademark pink mustache emblazoned across the cars of its contracted drivers, hit the Nasdaq exchange priced at $72 per share and soon raced to about $87 per share in the minutes after trading began on Friday. The company is trading under the predictable “LYFT” symbol.
If its early gains hold through the closing bell, Lyft would top Spotify’s valuation at the end of its first day of trading last April and become the biggest tech IPO since Snap debuted with a $28 billion valuation in 2017.
With its IPO, Lyft beat Uber, its biggest — and simply bigger — rival in going public. Uber is expected to go public later this year.
Both ride-sharing companies have been able to attract millions of users by offering cheap transportation, but critics of Lyft and Uber have called into question whether the two companies will be able to turn their popularity into a viable business.
Lyft lost more than $900 million last year, according to a company SEC filing, after losing $688 million in 2017. The company itself noted its difficulty in turning a profit, adding “we have a history of net losses and we may not be able to achieve or maintain profitability in the future.”
Why would investors be intrigued by a company losing so much money? One possibility is that Lyft has shown strong revenue growth, with sales increasing from $343 million in 2016 to $2.2 billion in 2018. And as Alex Madrigal at The Atlantic pointed out, Lyft has started to cut into Uber’s overwhelming dominance, with 39 percent of the ride-sharing market by the end of last year, compared to 22 percent at the end of 2016.