Lyft plans to launch the roadshow next week leading up to one of the largest and most highly anticipated IPOs in recent years. Here’s a look at what an IPO roadshow is and what investors can expect.
What’s A Roadshow?
The first steps in conducting an IPO are for the company going public to assemble a team of underwriters to draft a form S-1 to submit to the Securities and Exchange Commission to gain regulatory approval for the IPO. Once the IPO is approved, the underwriters organize a roadshow to travel and meet with prospective investors.
During the roadshow, the underwriters typically explain the circumstances of the IPO to investors, including factors such as how many shares of stock the company is selling and the target valuation.
The purpose of the roadshow is to sell shares of stock, but also to gauge the level of market interest and narrow the target price range of IPO shares.
The underwriters have a lot riding on getting the IPO price right. If the IPO price is too low, the underwriters failed the company in maximizing its funding. If the IPO price is too high, the underwriters failed the IPO investors in protecting their investment.
When a company meets with investors during its roadshow, it typically makes a presentation to investors and then conducts a Q&A session. The presentation includes information from the S-1 filings broken down into easily digestible chunks. It also typically includes a sales video telling the company’s story and highlighting its long-term goals. Companies can then for the first time get real-time feedback on their story and financial numbers — and an understanding of what investor concerns may be once the stock hits the market.
Roadshows typically take place roughly two or three weeks prior to the potential IPO date. In the case of Lyft, the March 18 roadshow date suggests a late April IPO is possible.
What To Expect From Lyft
Since Lyft is one of the larger IPOs in recent history, the company’s roadshow is expected to last two weeks.
Heading into the roadshow, Lyft is anticipating an IPO valuation in the $20 billion to $25 billion range. Potential Lyft investors and even Uber investors will be watching the Lyft road show closely for any signals that demand and valuation are stronger or weaker than anticipated.
Lyft’s much larger competitor Uber is also planning to go public this year at a valuation of around $190 billion.
Once the Lyft roadshow is complete, the company will likely announce a target IPO date some time in April. Investors will finally get all the details about the anticipated IPO pricing, company valuation and the total number of shares sold on the day prior to the IPO date. This date is also when IPO investors find out how many shares they were able to purchase at the IPO price.