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Lyft gets first Wall Street Buy recommendation ahead of listing next week

The San Francisco ride-share company’s IPO is oversubscribed on the second day of its roadshow and way ahead of its listing on March 28

A driver looking at the Lyft app
In the fourth quarter of 2018, San Francisco-based Lyft had 18.6 million active riders and 1.1 million drivers

Ride-share company Lyft Inc, which is Uber’s closest rival, won't list on the tech-laden Nasdaq until next week, but one Montana-based investment firm is already rating it a "buy."

The San Francisco company has only been on the road marketing its IPO for two days, but investors have already been informed that the listing is oversubscribed at the current price range. Reuters reported that it is likely that the ride-hailing startup will “fetch or even exceed” the $23 billion valuation it is seeking.

READ: Lyft takes IPO fast lane, zipping ahead of rival Uber

Meanwhile, DA Davidson isn’t holding its horses. According to CNBC, the Montana-based investment firm isn't waiting until the shares, which will trade under the symbol "LYFT," are ticking away, to recommend getting in. 

DA Davidson senior research analyst Tom White initiated coverage with a "buy" rating and a $75 price target on Lyft. The tech unicorn is expected to be priced at between $62 and $68 per share.

White is excited about the total addressable market for personal transportation, which he writes US consumers are spending $1.2 trillion on annually.

"On-demand services have already disrupted traditional ownership models in sectors like entertainment/computing," White wrote in a note to clients Tuesday. "The continued population migration to cities and the rising costs of personal car ownership will further drive adoption of Transportation as a Service (TaaS) models over the coming years."

Lyft started its IPO road show on Monday and has spent the last two days meeting with investors in New York. Books close next week as it is set to price the IPO on March 28.

Company's financials

The San Francisco-based ride-hailing company’s filing lifted the hood on its financials. Lyft's revenues doubled in 2018 to reach $2.2 billion, according to the contents of its S-1 registration with the SEC. That is up from $343.3 million in 2016 and $1.1 billion in 2017.

But like Uber, Lyft is hemorrhaging money. Its net loss climbed to $911.3 million in 2018 from two years of steady losses of $682.8 million in 2016 and $688.3 million in 2017.

Lyft claims its ridesharing market share grew to 39% in 2018, up from 22% in 2016. In the fourth quarter of 2018, it had 18.6 million active riders and 1.1 million drivers.

Contact Uttara Choudhury at [email protected]

Follow her on Twitter@UttaraProactive 

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