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Lyft Crashes Below IPO Price
- ratling 8y agoIMO this means nothing. Facebook did the same thing.
- mbesto 8y agoEvery large tech IPO in the last decade and a half has done the same thing.
- PKop 8y agoNot Twilio, but generally you're probably right.
- hangonhn 8y agoVMware did too.
- notyourday 8y agoFacebook was profitable or at least cashflow positive if I recall correctly.
- asaddhamani 8y agoHad to be profitable.
- charlesdm 8y agoAnd it still dropped more than 50% in the first year
- spyspy 8y ago“Volatile hype stock has volatile hype stock-like trading activity during a classically volatile trading period.”
- artwr 8y agoThanks for the appropriate TL;DR
- nicolashahn 8y ago"Crashes" from IPO of $72 to $70.60 at the time of this writing. Okay.
- swarnie_ 8y ago10% move in one day, you don't think that's significant in any way?
- dawhizkid 8y agoWell it opened at $87 on Friday, so it's a 20% drop since opening.
- deminature 8y agoIt's still almost double the last private valuation. It was $10bn prior to IPO, now north of $20bn, peaking at almost $25bn.
- shereadsthenews 8y agoIt was valued at $14.5bn in their June 2018 round of fundraising.
- dawhizkid 8y ago
- spork12 8y agoThey get options on the 4th. These big tech IPOs are a lot of fun to trade. I bought my current house, mortgage free, from the proceeds of the TWTR ipo.
- GolfyMcG 8y agoI think "crashes" is a little bit sensationalist. They're down which is obviously not great but they're down by less than 10% at my time of writing. While it won't get as many upvotes this should probably be titled "Lyft IPO Poorly Received" or more literally, "Lyft Down 10% After IPO"* Edit: This is actually their second business day.
- swarnie_ 8y agoCompany which lights a billion dollars on fire each year is not a sound investment? No shit.... As a regular user of Lyft i still have 0% loyalty. I can get 3 or 4 different services in my city and you can be sure i'm picking the cheapest one every time. As soon as VCs stop subsiding my travel expenses ill move right on to the next service. I'm guessing some of you are locked in for 6 months and my post made you sad =(
- dawhizkid 8y agowhich city has 4 different rideshare companies in operation?
- deleted 8y ago[deleted]
- caniszczyk 8y agoAustin at least 4... Uber, Lyft, Wingz, RideAustin
- criddell 8y agoThis is the reason I can't figure out how Uber or Lyft is worth billions of dollars. It doesn't seem like the barriers to entry are very significant. How long before there's an app that queries the different services and hails a ride from the service that can get there the fastest or provide the cheapest ride?
- sowbug 8y agoThere's nothing stopping you from writing a Facebook clone. But it won't succeed. Why not?
- EpicEng 8y agoExcept ride-sharing doesn't have a network effect. I don't care if all my friends use Uber; it makes no difference and we all will use the next company if they're even a dollar less / ride and the service quality is on par.
- samlevine 8y agoThis mostly just means that Lyft did a good job in pricing their IPO to get the most money they could from it.
- mlthoughts2018 8y agoIt is one of the few parts of equity trading that is pretty nearly exactly zero-sum. Insiders with knowledge of the over-priced IPO externalizing the impending price correction onto external investors who buy the hype. Existing shareholders know there is no evidence from the existing business to indicate a future cash flow that could net-present-value justify the IPO price, so that “believers” in future Lyft growth are just factually wrong, pending some currently unknowable drastic change to operating practices to change profitability.
- hjk05 8y ago“Lyft rises after IPO” This means they did a good job! “Lyft falls after IPO” This means they did a good job! I’m getting a destinct “this is good for bitcoin” feel about how people react to post IPO movements. So going on from here, if they are above IPO is that good, or is it good if they are below IPO?
- plorkyeran 8y agoThey're good for different people. Rising after IPO is good for the investors who bought the IPO shares, but bad for the company who could have sold the IPO shares for more. Falling after IPO is the other way around.
- riphay 8y agoThe banking syndicate takes on some risk in order to facilitate trading in a successful IPO. Usually to compensate for this risk the IPO price is (slightly) less than what they believe the stock will trade at. This way the IPO investors and the banks can make a bit of money for bearing this risk. It's usually seen as unsuccessful and a bad-news story when a stock falls below its IPO price. Even though Lyft might have taken the max from investors, it will diminish its ability to raise further equity and its bankers will lose the trust of the IPO investors.
- shereadsthenews 8y agoGood for them for taking all the money off the table. There's nothing dumber than an IPO that pops.
- shin_lao 8y agoIt's absolutely a normal behavior for a stock to go down post IPOs. Can be so many things, from people selling stocks they had for a long time, people who just speculated on the opening and are cashing in, or just because today it's cold and I had fish last night and I'm not feeling well and yeah just short that Lyft stock. Let's see how it does in the next months.
- smolsky 8y agoWell, the financials look shady to me: $900 loss and no plan in sight. Perhaps the IPO euphoria was that short-lived? Regarding the post-ipo crash - yeah, FB did that. Yet they turned a good profit soon after and then rebounded.
- deleted 8y ago[deleted]
- naveen99 8y agoMy Lyft shares are locked up for 6 months :(
- a-wu 8y agoI thought a lot of tech stocks did this immediately after IPO as the pre-IPO shareholders sold off their shares?
- shereadsthenews 8y agoThat's not really common. Pre-IPO shareholders who are not locked up sell into the IPO, not right after it. That said, you aren't wrong about volatility right after an IPO. Look at ESTC: debuted at $70 and traded as low as $58 a few days later ... then as high was $100 recently.
- ummonk 8y agoMost pre-IPO shareholders are in the lockup period.
- dawhizkid 8y agoHonestly between $UBER and $LYFT I have no idea why you'd own $LYFT. $LYFT has all their eggs in one basket. It's a pure bet on US rideshare, which has been plateauing for quite some time. $UBER has a global presence, and although lost in Asia owns a substantial share of Didi (#1 in China) and Grab (#1 in South East Asia), and now bought Careem (#1 in Middle East), and is still dominant in South America. It also has Uber Eats, which has grown to a multi-billion co on it's own. It's also much further along on proprietary self-driving tech than Lyft is.
- untog 8y agoYou can make the argument either way. On one hand, Lyft has its eggs in one basket. On the other, Lyft is concentrating on one market and can focus on it a lot more clearly than Uber can. I agree about Uber Eats, though. That feels like a genuine differentiator. But I'll bet that when Uber IPOs it'll command a price far higher than Lyft's, so it'll be factored in.
- shereadsthenews 8y agoLyft doesn't have just one basket. Their supposed growth area is bicycles and scooters, a money-losing industry in which they will be the Nth entrant for a large value of N. They also have a self-driving-car effort that is dead last.
- toast0 8y agoOr lyft is focused, and uber is spreading itself too thin. (I am not invested with either)
- rb808 8y agoIs today the first day you can short Lyft? Or could you do so on Friday already. I'm not sure of the mechanics of stock borrow right after an IPO.
- shereadsthenews 8y agoMarket participants can sell anything short by picking up the phone. Retail accounts still can’t sell Lyft short because there are no shares available to borrow. Also there is still not yet an options market available to all, but again if you’re a trader and you can get someone to write you an option there you go.
- mandevil 8y agoAs I understand it, you can short an IPO on day 1, but it probably won't work out very well for you, because the underwriting banks have agreed to buy shares at a specific price if the price falls. So if you try and short it you are getting into a game of 'who has more money' with a bunch of investment banks, which you will rarely win.
- huac 8y agoon IPO day, the IPO's bankers will buy up shares, "providing support" for the stock at a given price. it looked like management's preferred price point was $80 for most of the day, so the underwriters were buying at that price point. the greenshoe agreement helps the bankers buy at that point without actual economic exposure to the IPO (worth reading the wikipedia article if you're interested here). one explanation might be that the bankers bought up their entire allocation by the end of the day, which allowed price to drop to 78 in closing minutes. after day 1, who cares, the bankers already got paid.
- olivermarks 8y ago'crashes' seems to be an overly dramatic and popular word this year, people who oppose the UK leaving the EU love to use it too...