Billionaire investor Carl Icahn buys $100m stake in Lyft: it's a 'no-brainer'

Carl Icahn Laboratory

Billionaire investor Carl Icahn has bought a $100m stake in Lyft, the fast-growing taxi app rival to Uber.

Icahn, who is well known for forcing changes at companies he invests in – including ousting Jerry Yang as chief executive of Yahoo, said he believed “ridesharing is poised to become a fundamental component of our transportation infrastructure”.

Icahn’s investment values three-year-old Lyft at $2.5bn, which Icahn said made investing in it a “no-brainer” compared with Uber, which was recently valued at $41bn.

“If you look at the way the market evaluates Uber and then look at the valuation of Lyft, Lyft is a tremendous bargain,” Icahn said in an interview with the Wall Street Journal. “There is room for two.”

Icahn said Lyft’s rapid growth was “extremely compelling, and increasing urbanization over the next five to 10 years should enable the Company to maintain that trajectory”.

His investment is an extension of a $530m funding round led by Japanese e-commerce company Rakuten, which valued Lyft at $2.5bn. As part of the investment Jonathan Christodoro, one of the managing directors of Icahn Enterprises, will join Lyft’s board.

John Zimmer, Lyft’s president, said: “Carl Icahn’s record as an investor is unparalleled.

“His recent success investing in the technology sector stems from a focus on companies that deliver incredible long-term value to their customers, such as Apple, Netflix and eBay/PayPal. We’re thrilled to partner with Carl during this exciting period in Lyft’s growth as we work to rebuild the US transportation infrastructure and reconnect local communities. With this additional investment, we remain focused on deepening our US footprint, continuing to lead with product innovation and providing the best possible experience for drivers and passengers.”

Lyft, which is known for the trademark pink mustaches fixed to its drivers’ cars, operates in 65 US cities. Uber, which was founded in 2009, has expanded to more than 250 cities across the world.

Lyft has had a headstart on Uber in encouraging passengers to share their ride with other customers in return for cheaper fares. In March Lyft’s chief executive Logan Green said ridesharing via its Lyft Line service, which matches up customers going in similar directions, had overtaken single-person journeys in terms of revenue in San Francisco. Uber has launched a similar service called Uber Pool.

As well as being CEO, Green makes extra cash on the side by operating as a Lyft driver. “The other day I picked somebody up and made $20 on my way into work,” he said at the South by Southwest technology and music festival in March. “Every dollar counts.”

Powered by Guardian.co.ukThis article was written by Rupert Neate in New York, for The Guardian on Friday 15th May 2015 16.30 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

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