By Canadian Press

Lyft hikes IPO target to $70-$72 a share as excitement rises

Mar 27, 2019 | 5:54 PM

SAN FRANCISCO — Lyft is lifting the price target for its initial public offering in a sign of the excitement surrounding the stock market debut of a ride-hailing service that’s gaining ground on its rival Uber.

With the revision disclosed Wednesday, Lyft is now seeking $70 to $72 per share, up from its previous goal of $62 to $68. If it attains its new pricing goal, Lyft will have a market value of about $24 billion, even though the San Francisco company still hasn’t turned a profit since co-founders Logan Green and John Zimmer started the service in 2012.

Since then, Lyft and Uber have combined to popularize the trend of summoning a ride on a smartphone app that connects them to drivers who use their own cars to pick up passengers. The fares are split between the drivers and the ride-hailing companies that make the connections.

The trend has turned into a worldwide cultural phenomenon with plenty of room with future growth, the key reason why so many investors appear to want a slice of the action now. Uber is expected to price its IPO later this spring.

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Lyft’s pricing adjustment comes after the company’s management bankers spent a week meeting with investors to explain why buying into the IPO makes sense even though the company has an uninterrupted history of losses totalling nearly $3 billion so far. What’s more, Lyft has acknowledged it may be many more years before it starts making money, especially if it is unsuccessful in its efforts to develop a fleet of self-driving cars so it can lower its costs.

The higher price target implies investors are clamouring to buy the nearly 31 million shares that Lyft is selling in its IPO.

The proof will come Thursday when a final IPO price is determined, setting the stage for the stock to begin trading Friday morning under the ticker symbol “LYFT.” It’s still possible the IPO price could end up being above $72 per share if Lyft’s investment bankers believe investor demand justifies another increase.

Despite its losses, Lyft has other impressive numbers to dangle in front of prospective investors. Its revenue doubled last year to $2.2 billion, as its share of the U.S. ride-hailing market rose to 39 per cent in December, up from 22 per cent at the end of 2016, according to its IPO filings.

Those market gains came at the same time that Uber was being sullied by a variety of unsavoury revelations, including evidence of rampant sexual harassment within its ranks , allegations that it stole some of its self-driving car technology and a yearlong coverup of a massive computer break-in that heisted personal information about millions of passengers and drivers.

Lyft tried to position itself as the kinder, gentler ride-hailing service, a strategy that appears to be paying off in spades. Even before the IPO pricing, some stock market analysts have already released research reports asserting the company’s stock is worth $75 to $80 per share.

Michael Liedtke, The Associated Press