US ride-hailing company Lyft has priced its shares at $72, giving the Uber rival a valuation of $24bn. On Thursday, Lyft raised more than $2bn ahead of Uber's keenly awaited initial public offering (IPO). John Colley, professor of practice at Warwick Business School, said in a statement that Lyft's $24bn valuation seemed high “for a taxi business that will not make money for three years. “It reflects the wall of money looking for tech investments, rather than any fundamentals of the business,” Colley said. While user growth had been strong, there were low switching costs for customers and drivers in the industry, and Lyft was paying drivers above-market rates and charging customers less. “Both can leave as rapidly as they arrive. Drivers are already unionising and agitating for better conditions. Customers will have to pay more if Lyft is to make a profit,” Colley said. Shweta Singha, assistant professor at Warwick Business School, said Uber's $120bn valuation ahead of its IPO "is l...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, ProfileData financial data, and digital access to the Sunday Times and Sunday Times Daily.

Already subscribed? Simply sign in below.

Questions or problems? Email or call 0860 52 52 00. Got a subscription voucher? Redeem it now