The Lyft IPO has a lot of traders excited.
The rideshare giant has always sustained itself with private investments. But Lyft’s recent decision to go public has raised some interesting questions about the future of the company and how traders can take advantage of the Lyft IPO.
Before you make any moves, it’s important to understand what the numbers behind the Lyft IPO can tell us.
So, let’s get down to it.
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Lyft IPO: What the Numbers Tell Us
The Lyft IPO is a big deal — it’s the first publicly traded ride-hail company in history. But you can’t possibly develop a solid strategy without some important details.
How much is Lyft worth? How much of the market does Lyft control?
Here’s what the numbers tell us …
If you need a ride, you can find Lyft in over 600 cities across the United States and Canada based on data from 2018. With nearly 2 million drivers and over 30 million riders, there’s plenty of supply and demand.
Lyft’s biggest competitor, Uber, still controls the rideshare market, but Lyft has been growing fast.
From December 2016 to December 2018, Lyft’s market share grew by 10% — from 29% to 39%.
Revenue & Valuation
Maybe the biggest indicator of what the Lyft IPO has in store for us is the company’s incredible valuation.
The company started in 2010 with a valuation of $6 million. In less than a decade, this valuation has increased to an unbelievable $25 billion, making it what some like to call a ‘decacorn’ — a startup with a valuation of at least $10 billion.
Lyft’s revenue has demonstrated impressive growth as well, going from over $340 million to $1.1 billion from 2016 to 2017, and rising to $2.2 billion in 2018.
Lyft has had plenty of success in generating funding from private investors.
Before IPO, Lyft managed to raise almost $5 billion from 68 investors.
Lyft plans to sell another 30.7 million shares at $72 per share, which will greatly increase the company’s valuation and raise enough cash flow to sustain itself for another 10 years.
Before IPO, Lyft had a little over 250 million shares distributed between a number of private investors and the company’s co-founders.
Together Lyft’s co-founders, John Zimmer and Logan Green, own 5.3% of these shares. About 40% is split between major firms like Fidelity and Andreessen Horowitz with the remaining 54.6% belonging to other investors.
This ownership structure gave Lyft a valuation of about $18 billion.
At IPO, Lyft will distribute another 30.7 million shares. This will likely bring the valuation to around $25 billion and give new investors a 10.8% stake in the company.
The Lyft Infographic
It’s not often that a company valued at over $20 billion opens itself up to be publicly traded, so it’s no wonder that this IPO is generating so much hype.
There are plenty of opportunities to trade the Lyft IPO directly and to make sympathy plays on other companies in the rideshare space.
As always, the most important thing is strategy and risk management. While these numbers can give us an idea of what to expect, nothing is ever a sure thing.
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