NEW YORK (Reuters) – Lyft Inc. ‘ s initial public offering (IPO) is oversubscribed on the basis of the commitments made so far by investors, making it more likely that the ride-hailing startup will reach or even exceed the $23 billion valuation is looking for people familiar with the matter said on Tuesday.
FILE PHOTO: A car with a Lyft logo in the screen stations in a street as the company prepares for its upcoming IPO in New York, USA, March 19, 2019. REUTERS/Lucas Jackson/File Photo
The development indicates that many investors are willing to take a look of uncertainty about Lyft the road to profitability and its strategy for autonomous driving, for fear of missing the largest and most high-profile technology IPO since Snap Inc in 2017.
Lyft started its IPO road show on Monday and has spent the last two days meeting with investors in New York, the sources said. It has an indicative IPO price range of $62 to $68 per share and is set to price the IPO on March 28.
The exact level of oversubscription can not be learned. The sources warned that the IPO price is still uncertain and asked not to be identified because the matter is confidential.
Lyft declined to comment.
Lyft of the progress in the IPO may bode well for larger rival Uber Technologies Inc, that is the planning for the kick-off of the IPO in April, Reuters reported. It was valued by investment bankers to as much as $120 billion.
Lyft said on Monday it aims to raise up to $2 billion in its initial public OFFERING on a fully-diluted valuation of as much as $23 billion, of which restricted stock.
There will be more meetings in Boston and New York this week between the investors and the 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 his company, while Uber is expected to play a more diversified strategy, according to the sources. Both Lyft and Uber have to make a profit, with Lyft reported a loss of € 911 million in 2018, wider than the $688 million loss in 2017.
In meetings with investors this week in St. Regis Hotel in New York, Lyft executives said that the company would be profitable much earlier were it not for investment in areas such as the scooter business, the sources said. Lyft executives also said that they expect the cost of processing transactions to come down, the sources added.
The executives also said that the investors ultimately want to monitor a fleet of tens of millions of autonomous vehicles, according to the sources.
In contrast to Uber, which has its own self-driving division, Lyft has chosen to strike partnerships to expand in the sector, including auto parts suppliers Magna International Inc. and Aptiv Plc. General Motors Co is an investor in Lyft.
“We ask Lyft of the competitiveness when it comes to the scale, his own autonomous driving system, but believe Lyft of the “platform” play for the other autonomous driving-can help players afford Lyft any time to either the perfect, the scale of its own technology or securing a partner for the long term,” D. A. Davidson & Co analysts wrote in a note on Tuesday.
The Success of Lyft and Uber represent a turning point in the Silicon Valley technology unicorns, which for years have snubbed the show in favor of raising capital in the private sphere, with investors happy to back their frothy valuations.
FILE PHOTO: An electric scooter is the ride-sharing company Lyft is displayed on a sidewalk in downtown San Diego, California, USA, March 15, 2019. REUTERS/Mike Blake
The market rally of the last few years, however, in combination with the desire of some of the startups’ insiders to cash out, is what many technology companies, including Airbnb Inc, Slack Technologies Inc. and Stripe Inc., plans market debut.
Rob Lutts, chief investment officer of Cabot Wealth Management in Salem, Massachusetts, said the transition to autonomous vehicles would be “destructive” for both Lyft and Uber, Lyft IPO documents don’t offer many details about the plans.
“I’m not sure if they have figured out what they are going to do. It is too early for that,” Lutts said.
Reporting by Joshua Franklin in New York; Additional reporting by Ross Kerber in Boston, and Greg Roumeliotis, and Carl O’donnell in New York; Editing by Susan Thomas and Matthew Lewis