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Lyft becomes first ride-sharing company to go public after $24bn valuation

Lyft has topped expectations with a record high valuation but what does the ride-sharing company's move to market mean for the sharing economy?

Ride-sharing platform Lyft made its debut on the stock market today with a valuation of $24.3bn (£18.65bn).

It marks the highest opening valuation for a tech company in two years and could pave the way for further sharing economy platforms, such as its rival Uber, to follow suit.

The San Francisco-based company will begin trading on the Nasdaq stock exchange with the IPO valued at $72 (£55) per share.

Cyrus Mewawalla, head of thematic research at data analytics company GlobalData, said: “Lyft is the number two competitor to Uber in the US and therefore, by listing before Uber, it gets access to capital markets before its competitor.

“Investors can get saturated with a specific investment theme, so first mover advantage is important when it comes to raising capital, especially when it comes to securing a high valuation.”

 

Lyft moves quickest in sharing economy market

Lyft has moved quickly to become the first ride-sharing app to be floated on the market.

“Lyft will set the benchmark valuation criteria for ride-sharing apps, because it’s the first major ride-sharing company to come to market,” said Mr Mewawalla.

“The companies that could join them in the future include Uber, China’s leading ride-sharing platform Didi Chuxing and also Grab, which is big in Asia.”

It is expected that Uber will go public later this year, with analysts predicting it could receive one of the biggest market valuations in history.

This is despite the fact that both Uber and Lyft are yet to make a profit.

Uber, Uber driver employment rights, Lyft market valuation
(Credit: Flickr/Mark Warner)

Mr Mewawalla explained: “One of the attractions of investing in Lyft and Uber is the way they are future-proofing their business.

“Not only are they market leaders in ride-sharing today but they are positioning themselves to be leaders in future trends, such as autonomous driving technology.

“Lyft’s competitive advantage lies in the fact that it is very well positioned in two tech themes that will disrupt the $3.5tn (£2.7tn) car industry – transport as a service and autonomous driving.

“In the early stages of a technology cycle, the critical success factor is monthly active users, or market share - profits always come second.”

Another factor in Lyft’s multi-billion-dollar valuation is its ability to move into other areas of the gig economy, such as food delivery.

Mr Mewawalla believes that Airbnb could follow Lyft’s route to market soon as well and it is likely to set another benchmark valuation in the accommodation-sharing sector when it goes to IPO.