Here's Why You Shouldn't Invest in the Lyft IPO

The Lyft and Uber IPOs mark the next phase of growth for ride sharing

"While ride-share executives continue to receive vast remuneration packages, and internal employees look forward to an IPO windfall at both Uber and Lyft [.] drivers are squeezed in order to shore up initial offerings to investors".

"With Uber and Lyft becoming public companies, shareholders will expect them to rationalize prices on rides toward sustainable levels", said Paul Hudson, founding partner at Glade Brook Capital Partners. However, financial tycoon Warren Buffett won't be investing in Lyft IPO.

The company's appeal to investors hinged on the potential for ride-hailing to replace vehicle ownership. Lyft's shares are expected to list this Friday on NASDAQ under the ticker "LYFT" while the IPO is expected to close on April 12, 2019. 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. Lyft's overall bookings hit $8.1 billion in 2018, as 1.9 million drivers ferried almost 31 million customers in the US and Canada.

Lyft has won the race with its much larger rival Uber to go public, and is giving investors their first chance to get in on the peer-to-peer ride-sharing business.

On Thursday, Lyft said it priced 32.5 million shares, slightly more that it was offering originally, at $72, the top of its already elevated $70-$72 per share target range for the IPO.

Lyft's branding as a warmer, more caring alternative to Uber dates back to its launch in 2012.

The competition has cost both companies, though.

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But Lyft lost $911 million (roughly Rs. 6,325 crores) on $2.2 billion (roughly Rs. 15,276 crores) in 2018 revenues.

It's nearly counterintuitive, on the surface at least, that big-name investors would be clamoring at the gate and packing hotel penthouses to get a piece of a company so deeply in the red, but that's exactly what's happening with Lyft's initial public offering.

The company's USA market share has expanded from 22 percent in 2016 to 39 percent previous year as Uber slogged through revelations about rampant internal sexual harassment claims, allegations that it stole self-driving technology and other mortifying issues, prompting a consumer backlash.

Even so, Lyft's revenue per ride has been increasing, so some analysts see the company as headed in the right direction. They also hit the biggest jackpots in the IPO.

Logan Green: 684,591 class A shares and class B shares worth $655.5 million at IPO prices. On the other hand, it has the largest revenues of a pre-IPO company behind only Google and Facebook.

It intends to do some good with its money-announcing that it plans "to invest the greater of 1% of our profits or $50 million annually toward our social impact efforts". 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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