Startups Weekly: Why Lyft’s $2.2B IPO Wasn’t ‘Crazy Land’ Or ‘Nuts’

Lyft completed its long-awaited IPO this week, trading 21 percent higher Friday than its initial offering price of $72 per share. It closed its first day of trading at about $78 per share, up roughly 9 percent.

I spoke to IPO guru Brian Hamilton, the CEO of banking software company Sageworks, about Lyft’s offering to get a sense of how Wall Street views the buzzworthy tech unicorn. As I wrote earlier this week, Wall Street doesn’t seem to care about profitability, prioritizing growth instead. Lyft is definitely growing, quickly, and working hard to shrink its losses. Hamilton said the price per share was reasonable, and, given Lyft’s positive cash flows, he seemed confident the company will fare well on the Nasdaq this year.

He was especially clear about one thing: Lyft’s offering is nothing like Snap’s. “The camera company,” if you remember, had posted only $404.5 million in revenue ahead of its IPO, which valued it at $23.8 billion: “It’s not crazy land; it’s not nuts; it’s not Twitter, it’s not Snap; it’s reasonable actually, I’m surprised,” Hamilton told TechCrunch. “I’ve seen some of these tech companies go for much higher valuations [and] those companies commanded much higher sales multiples.”

Ultimately, Lyft commanded an 11x revenue multiple, on par with what we expect from Uber next month. Lyft could have priced higher given demand, though my Equity co-host Alex Wilhelm argued against that prospect on this special episode, where we discuss Lyft’s first day of trading.

Hamilton, like Alex and I, also emphasized the benefit of beating Uber to the public markets and debuting on the stock exchange at peak bull market: “The markets are hot, people want to put their money somewhere,” he said. “Even the people that have been on the fence want [Lyft stock].”