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Lyft IPO May Lift These ETFs

Sanghamitra Saha

The number two US ride-hailing firm Lyft looks set to debut on Nasdaq on Mar 29 under the symbol “LYFT.” On Mar 18, Lyft has set a price range for its IPO, which takes the company valuation to about $20 billion. Lyft plans to sell a little more than 30 million class A shares and anticipates investors to purchase the stock in the range of $62 to $68 a share.

The company expects to raise as much as $2.1 billion by making a stock market debut. The company won't sell all of its shares to public though. If things go as per plans, Lyft will be the biggest U.S. technology IPO since Snap Inc. (SNAP) in 2017 and the tenth-largest technology or Internet IPO of all time in the United States, according to data provider Dealogic, as reported on Reuters.

Investors should note that Lyft’s rival Uber Technologies Inc is also going public in April. Uber eyes a valuation of as much as $120 billion, per sources, though some analysts have pegged it closer to $100 billion based on selected financial figures it has disclosed.

Inside Lyft’s Financials

Lyft has 39% of the U.S. ride-sharing market, up from 35% early in 2018, and 22% in January 2017. Lyft’s revenues were $2.16 billion for 2018, double the previous year’s numbers. It recorded a loss of $911 million in 2018 versus $688 million in 2017.

ETFs to Watch

Though the following ETFs don’t presently own any share of Lyft, the IPO of the company (if it happens) might see its addition in a number of funds in the near future. Below we have highlighted three ETFs that might consider including Lyft in their holdings after IPO, or at the very least, be in focus given the recent IPO boom. These funds may benefit if Lyft IPO turns out to be a red-hot technology IPO (read: Will IPO ETFs Sizzle in 2019?).

First Trust US IPO Index Fund FPX
 
The product tracks the IPOX-100 U.S. Index, giving exposure to the booming U.S. IPO market. The ETF focuses on 100 largest and most liquid U.S. IPOs. This is a rules-based value-weighted index measuring the average performance of U.S. IPOs during the first 1000 trading days. It charges 59 bps in fees.

 Renaissance IPO ETF IPO
 
The fund gives exposure to the U.S. IPO market. The ETF tracks the rules-based Renaissance IPO Index, which is a portfolio of newly U.S.-listed initial public offerings of companies whose unseasoned equities are under-represented in core U.S. equity indices. IPOs that meet liquidity & operational screens are included in the Index at the end of the fifth day of trading, or upon quarterly reviews, weighted by tradable float, capped at 10% & removed after two years. It charges 60 bps in fees (read: 5 ETFs Shining With Green Returns & More Room to Run).

Invesco NASDAQ Internet ETF PNQI

The underlying NASDAQ Internet Index is a modified market-capitalization weighted index designed to track the performance of the largest & most liquid U.S.-listed companies engaged in internet-related businesses & listed on one of the three major U.S. stock exchanges. The fund charges 60 bps in fees.

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Invesco NASDAQ Internet ETF (PNQI): ETF Research Reports
 
Renaissance IPO ETF (IPO): ETF Research Reports
 
First Trust US Equity Opportunities ETF (FPX): ETF Research Reports
 
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