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This mostly just means that Lyft did a good job in pricing their IPO to get the most money they could from it.

mlthoughts2018 8y ago
It 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 ago
  They'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 ago
  The 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.
  - perlgeek 8y ago
    > it will diminish its ability to raise further equity and its bankers will lose the trust of the IPO investors ... and since Lyft is far from being cash-flow positive, it wouldn't surprise me much if they were looking for new money in 1 to 2 years. So if this turns out to not just be the market being volatile, but a serious trend, this can hurt them quite a bit.

mlthoughts2018 8y ago

It 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 ago
They'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 ago
The 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.
- perlgeek 8y ago
  > it will diminish its ability to raise further equity and its bankers will lose the trust of the IPO investors ... and since Lyft is far from being cash-flow positive, it wouldn't surprise me much if they were looking for new money in 1 to 2 years. So if this turns out to not just be the market being volatile, but a serious trend, this can hurt them quite a bit.