Lyft IPO Oversubscribed, Could Reap $1B In CA Taxes

Lyft’s initial public offering (IPO) is reportedly oversubscribed, with the company on its way to getting or maybe even exceeding its sought-after $23 billion valuation.

The ride-hailing startup launched its road show on Monday (March 18), and sources told Reuters that executives have been meeting with investors in New York for the past two days. Lyft has set an IPO price range of $62 to $68 per share and is set to price the IPO on March 28.

However, it isn’t known how oversubscribed it is, and the sources added that the IPO price has yet to be determined.

Lyft and its investors aren’t the only ones that will benefit from the IPO. California could receive “$1 billion or more” from the capital gains taxes on the IPO’s stock sales.

“We need those billions for education and other areas,” John Chiang, the state’s former treasurer and controller, told CNBC, adding that the collection of taxes “may not happen all at once, and could be spread over time.”

“If you’re coming with a $19 billion valuation, you’re talking about [a state income tax rate of] 13.3 percent for the millionaires,” he added. “Even though we’re looking at all-in state budget in excess of $200 billion and a general fund budget of about $140 billion-plus, $1 billion or more is significant.”

As of 2017, about 70 percent of California’s general fund revenues were generated from personal income tax collections.

“IPOs are good for California’s bottom line,” said Chris Thornberg, a founding partner with Beacon Economics.

In addition, ride-hailing rival Uber is planning to launch its initial public offering (IPO) in April, with sources saying that the company will issue its required public disclosure next month, then start its investor road show. The San Francisco-based company is set to be valued at $120 billion.

“When you’re talking about Uber and its massive valuation, that’s billions,” said Chiang.

And other Bay-area firms are reportedly planning for 2019 IPOs, including Airbnb and Slack.