Coverage: Lyft begins road show for huge IPO

Lyft Inc. pegged its valuation at between $21 billion and $23 billion as the ride-hailing service kicked off the roadshow to market its initial public offering Monday.

Maureen Farrell of The Wall Street Journal had the news:

The range, equating to between $62 and $68 a share, is preliminary and could change by the time the shares start trading around the end of next week. The company issued a filing outlining the range Monday, confirming a report by The Wall Street Journal on Sunday.

The overall valuation is on a fully diluted basis and includes the roughly $2 billion Lyft is expected to raise in the offering. The company and its underwriters will set a final IPO price based on feedback from investors in the roadshow.

With the Lyft IPO process entering its final stage, what’s expected to be one of the most hectic years for new issues is about to get under way in earnest. Though the IPO market got off to a slow start this year because of the partial government shutdown, Lyft’s eagerly anticipated debut is expected to be followed by a wave of listings by Uber Technologies Inc., Pinterest Inc., Slack Technologies Inc. and others as fast-growing Silicon Valley startups cash in on heavy demand on Wall Street.

Kate Conger and Michael J. de la Merced of The New York Times reported that the IPO value is significantly higher than its last private funding valuation:

The ride-hailing company said in a new regulatory filing that it hoped to be valued at up to $23 billion when it lists on the stock market as soon as next week, the highest number for a tech company since Alibaba, the Chinese e-commerce giant, went public at a $169 billion valuation in 2014. Lyft’s target value is significantly greater than its $15.1 billion valuation in its last private funding round, a sign that it expects a warm reception from investors.

That provides a benchmark for other tech companies that are preparing to go public this year, including Lyft’s chief rival, Uber, as well as Pinterest, Postmates, Slack and others. All are seeking high valuations, with their offerings likely to bring a wave of wealth to tech investors, founders and early employees that will once again rev up the Silicon Valley start-up ecosystem. Lyft’s I.P.O. is expected to be quickly eclipsed by Uber, which may go public at a valuation of up to $120 billion.

“We’re looking at Lyft as a bellwether for the summer I.P.O. market,” said Matthew Kennedy, a senior I.P.O. market strategist at Renaissance Capital. “The others in the pipeline are all watching Lyft and looking to see whether investors are interested in companies that are highly unprofitable but highly valuable.”

Karina Mitchell of Fox Business wrote that investors may want to steer clear:

FOX Business’ Charles Payne warns investors need to be careful about unicorn IPOs, pointing to Facebook as an example of an IPO that tanked after going public.

TrendMacro CIO and Founder Donald Luskin says both Lyft and Uber have “a vast addressable market,” adding, “it turns every car into a driverless car where the difference is I don’t have to drive it personally.”

Patriarch Organization CEO Eric Schiffer said investors are making a mistake if they buy into Lyft or Uber, suggesting it’s far too soon. Unlike Facebook, which built up a network, “people can switch very easily between the two,”  according to Schiffer. He believes Lyft is overvalued and investors will have to wait two or three years at a minimum before they see any upside returns.

“It’s a unicorn without even a horn.”

However, Luskin believes investors are making a return to tech stock and in the long term, it’s a sector that makes sense. A sector that investors buying into the market can have confidence in despite some bumps in the road along the way.