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

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

Lyft Inc., the No. 2 USA ride-hailing giant, jumped in its debut after raising $2.34 billion in an initial public offering that priced at the top of an elevated range, sending an encouraging signal to the stampede of Silicon Valley companies lining up to go public this year. But it was still able to manage to profit in terms of revenue up to a total of $2.2 billion, some of the highest ever of any company before going public. Its ticker symbol is LYFT. Lyft co-founders Logan Green and John Zimmer were also joined by some of the comnpany's drivers on Friday morning. The negative publicity helped Lyft attract new drivers and riders without spending much on marketing.

Co-founders Logan Green and John Zimmer talked about their early vision of the company and their commitment to providing alternatives to individual vehicle ownership.

The institutional investors that bought into the IPO clearly think so, enabling Lyft to demand a price that was above its initial goal of $62 to $68 per share. Lyft has pitched investors on it's "transportation-as-a-service model", that could eventually up-end traditional auto ownership as we know it.

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Uber, which is also loss-making, would be valued at about $128 billion at its IPO if awarded the same multiple as Lyft. Now that both Lyft and Uber have made it easy to summon a ride on a mobile app, more people are already starting to wonder if owning their own cars will make sense in the future. Lyft's reliance on drivers is a risk factor it mentioned in its paperwork to go public.

All eyes were on Lyft Friday morning as investors rushed to get a piece of the first big USA technology listing of the year.

She suggests retail investors should concern themselves with the long-term outcome of ride-sharing companies. It owns 18,544,716 class A shares and has a 6.5 percent stake in the company.

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That's more than the company lost in 2017, when it lost $688 million, and even more than 2016's loss of $682 million.

Lyft is a startup "unicorn" that has Wall Street gushing with excitement, but don't jump on the Lyft IPO bandwagon just yet.

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. "And now, after more than 1 billion rides, we're able to look forward to a world we've long imagined, designed less for cars and more for people".

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The lead bankers for the offering - JPMorgan Chase & Co., Credit Suisse Group AG and Jefferies Financial Group Inc. - presented over nine days to more than 600 investors, said a person familiar with the matter who asked not to be identified because the meetings were private. With its current rate, Uber is valued at around $70 billion on the private market, making it the most highly valued United States startup in the world.



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