On-demand transportation group Lyft found support from investors in the form of $600 million worth of new capital, which helped more than double the company’s share price from the previous year.
Spokesman for Lyft stated that the funding round, headed by its existing investor Fidelity Investments Inc., lifted the firm’s valuation to $15.1 billion. That is twice of what it was worth in April 2017, when it was valued at $7.5 billion.
The latest round came six months after the California-based group raised $1.5 billion at an $11.5 billion valuation. Since Lyft’s establishment in 2012, it has received a total of $5.1 billion in venture funding.
The funding now makes Fidelity one of Lyft’s largest investors, with over $800 million. Fidelity was also joined by US hedge fund Senator Investment Group LP in the new round.
Lyft vs. Uber
The investment should help Lyft keep up with rival Uber Technologies Inc., which just started to get its footing back after a really tough 2017.
As the two companies vie for the top spot in the ride-hailing industry, both are making investments outside of their core business to set themselves for the next phase in transportation.
Lyft and Uber are working on autonomous driving technology, but Uber has put the road testing of its self-driving vehicles on hold, after one those struck a pedestrian in Arizona. The two firms have also submitted an application that will allow them to operate electric scooters in San Francisco.
Lyft’s ride services are available in about the same number of US cities as Uber, as well as in Toronto, Canada. While Uber operates worldwide, it has pulled out from Southeast Asia, Russia, and China, after spending billions of dollars contending with local competitors.
Compared with Uber, Lyft has long been the smaller ride-hailing firm, but it was able to gain some advantage, as Uber struggled to pick it itself up again in the aftermath of various missteps and legal setbacks.
Recovering from a rough year, Uber had announced in May its plans for a secondary stock sale for employees and existing investors that would boost its value from last year’s $48 billion to $62 billion.
Uber has already managed to raise $1.25 billion worth of additional funding from Japanese tech investor SoftBank Group Corp in January. Against Lyft’s $5.1 billion, Uber’s overall funding has grown to $16 billion.
The ride-sharing app also said it intends to carry out an initial public offering (IPO) by the second half of 2019. As regards to Lyft’s IPO, the timeline is undetermined, but sources with knowledge of the matter stated in October that a public listing could happen sometime this year.
With Uber battling a series of scandals, Lyft was also given the opportunity to increase its market share to 35 percent in the US. The group had just 22 percent of US market share in January 2017 and 17 percent in same month in 2016.
In addition, Lyft is reportedly aiming for a record of $7.7 billion in gross bookings this year, which is the amount it takes in before pay out drivers. Uber, on the other hand, had $37 billion in gross bookings in the prior year.
Subscribe now to FSMNews and get your daily dose of information about forex, commodities, stock markets, technology, economy and a lot more. The latest market events are here at FSMNews.