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Lyft’s IPO Was a Success, Just Not for Investors Who Bought on Friday

72 points by chollida1 8y ago

john_moscow 8y ago
Well, it's called an exit for a reason. Essentially, a team of professional financial analysis that have models and experience pricing the stocks, and a knowledgeable PR team, decide the best time and the price to dump the stock onto the market in order to maximize the returns the existing equity holders will get. As a retail investor, you're practically betting against the house here.
- harryh 8y ago
  The vast majority of the shares owned by the major investors aren't sold on the day of the IPO.
- askafriend 8y ago
  Early Lyft investors have a 180 day lockup period - same as employees.
  - nissimk 8y ago
    Is there any rule or provision preventing them from short selling the stock in another account?
    - nemo44x 8y ago
      Yes that would be a violation of their lockup agreement. They can’t buy/sell puts/calls either.
      - docker_up 8y ago
        How would they be found out though?
        mandeepj 8y ago
        It's all linked via your SSA
        dboreham 8y ago
        Through KYC processes? They could theoretically conspire with another person who runs the trade but eventually compensates the principal. They'd only be found out through regular white collar crime fighting measures: parallel construction from NSA sigint for example.
        docker_up 8y ago
        But how would Lyft know that an employee bought puts from E-trade? How is that information shared? I don't think there's any information being exchanged by every single brokerage to Lyft, is there? The lockup agreement is a contractual thing, it's not a legal document. I don't see how Lyft would have the legal rights to search.
        jedberg 8y ago
        How do the police know that you're cooking meth in your basement? They don't, but if you do something dumb or make a lot of money, they tend to find out. It's the same here. Buying/selling options on Lyft as an employee is against their employment contract, and probably SEC rules. If they make a few thousand dollars doing it, chances are no one will find out. If they make a few million, the SEC will probably look into that.
        docker_up 8y ago
        Why is the SEC involved, especially if there's no insider trading involved? What if a Lyft employee quit a few months ago, and then hedges her RSUs with puts? There's no insider trading involved, why would the SEC care?
        asynchrony 8y ago
        Employees are normally forbidden from trading any derivatives, short selling, or even buying shares in a margin account. I’m not sure about the case of an employee that has left the company, but I expect that it would still qualify as insider trading through some window.
    - rongenre 8y ago
      Underwriters insist on a lockup period for a reason. Everyone asks about short selling and options, and the answer is always no.
- warp_factor 8y ago
  you are right and I'm not sure why you are being downvoted. Most of the 72$ shares sold pre-IPO to retail investors were dumped on IPO day to make a quick profit. The individual investors and employees that are still in LockOut are now holding the falling knife
  - vonmoltke 8y ago
    > Most of the 72$ shares sold pre-IPO to retail investors were dumped on IPO day Why do you think any retail investors got shares at $72?
  - deleted 8y ago
    [deleted]
  - sk5t 8y ago
    > holding the falling knife That is... not how that metaphor works. You want to avoid trying to catch the falling knife by placing a trade that attempts to time the market on a plummeting asset. But if you already hold it, and can't make any trades, well...
- monitorman 8y ago
  If things were as simple as this, you could then always short IPOs for a while, and the expected value would be positive.
  - xiphias2 8y ago
    Actually so far for the last few years at least this strategy was quite profitable. New IPOs significantly underperformed S&P500
  - opportune 8y ago
    You can short sell but unfortunately (at least for retail, and to the extent of my knowledge) not trade options in the first week of trading for a newly listed stock. Which is a shame because I 100% would have bought puts in the first hours of trading when I saw the market price surge into the 80s. Lyft's float is pretty low volume so the surge of retail investors trying to add Lyft to their portfolios caused a mini bubble.
  - mikestew 8y ago
    I'm sure you haven't looked over historical data, but if you did you'd find this to be a profitable strategy were it not for two problems: finding shares to borrow (a requirement to "short" a stock, because you borrow them and immediately sell), and if you try and fix that problem with buying put options, those won't be available for a week.
  - stevedewald 8y ago
    Yes, and the expected value is positive. Unfortunately for us, the banks that underwrite the IPO choose who to allocate the shares to, and they would prefer to allocate them to clients that have a history of not dumping the stock and/or lending shares out for shorts.
    - gruez 8y ago
      You'd think that if the EV was positive, that no one would buy the IPO, and would instead but a few days/weeks later. Why buy before the dip?
    - 8y ago
shhehebehdh 8y ago
> It serves as an important reminder that amid all the hoopla around trading debuts, small investors wind up taking a lot of the risk. Speculators take on a lot of the risk, whether they be small or large.
nostromo 8y ago
> Lyft’s stock market debut has set up its founders, employees, early backers and even those who scored shares in the initial public offering Thursday night for quite a windfall. ... not really? Most of those folks are locked out for several more months and can't sell -- at which point the stock may suffer increased selling pressure, much like Snap. These folks are no more successful now than they were a week ago. Also the IPO price was $72 -- and Lyft is selling at $69 right now, so, no, the institutions that bought the IPO are not having a windfall at present. (But now I see this article was published Friday, before today's continued decline, so I see why this made it past the fact checkers.) I found this simple graphic a great distillation of why Lyft and Uber may be considered overvalued: https://i.imgur.com/z1aCZaX.png https://i.imgur.com/z1aCZaX.png
- alexpetralia 8y ago
  > the institutions that bought the IPO are not having a windfall at present. This of course depends on when they sell, or sold!
  - deleted 8y ago
    [deleted]
- deleted 8y ago
  [deleted]
- ummonk 8y ago
  I’d be curious how much stock the IPO institutions sold after the opened. Do they tend to hold on to most of their stock for a long time? It could be that a bunch of people who were unable to participate in the IPO but bought the stock when it became listed on the market and popped were the main losers. Also, that graphic doesn’t make Uber and Lyft seem all that overvalued - does it really seem unusual for Lyft to do as well financially as Delta?
  - JumpCrisscross 8y ago
    > does it really seem unusual for Lyft to do as well financially as Delta? Delta's operations threw off $7 billion of cash in their FYE 2018 [1]; Lyft's burned over $280 million [2]. In the same period, Delta's net income was almost $4 billion [a] while Lyft lost over $900 million. Lyft is not doing as well financially as Delta. Instead, its investors are betting that it will--in the future--do much better than Delta is doing today. [1] https://www.sec.gov/ix?doc=/Archives/edgar/data/27904/000002790419000003/dal1231201810k.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/27904/000002... page 56 [a] page 54 [2] https://www.sec.gov/Archives/edgar/data/1759509/000119312519088569/d721841ds1a.htm#fin633517_4 https://www.sec.gov/Archives/edgar/data/1759509/000119312519... F-8 [b] F-4
forkLding 8y ago
Investopedia has a good article on this: https://www.investopedia.com/university/ipo/ipo2.asp https://www.investopedia.com/university/ipo/ipo2.asp
YeahSureWhyNot 8y ago
majority of the investment industry is about pump and dump during next round. as per usual, the unsuspecting retail investors driven by 'advisors' end up holding the bag. what else is new?
- jjeaff 8y ago
  Add to that, that many/most of the "advisors" work for the same institutions that are making tons on the IPO.
docker_up 8y ago
At this point, every single person who bought Lyft in the last two days is underwater. The only ones who are still above water are the pre-IPO investors and I wonder what their lock-up agreements are. In no way can this be called a success for anyone, it's a terrible IPO.
- deminature 8y ago
  Every previous tech IPO in the past few years has had a curve like this. Facebook dropped below $20 shortly after IPOing, before starting its long ascent to >$100. Short-term speculators are likely to be burned, but if Lyft does meet expectations in the next few years, long holders will make out well.
- m463 8y ago
  The purpose of the IPO is to fund the company. Many companies have been railroaded by the banks to price their IPO shares so conservatively that they make relatively little money on the IPO. It may be dwarfed by the amount the banks and investors make in a few days. Taking the long term view, maybe this IPO is just fine. The company gets funds, they grow their business and the stock will rise well over time.
  - JumpCrisscross 8y ago
    > The purpose of the IPO is to fund the company IPOs traditionally had four purposes: (1) Introduce a company's securities to public-market investors; (2) Price said securities; (3) Let existing investors sell; and (4) Raise money for the company. > Taking the long term view, maybe this IPO is just fine Analysts overstate the importance of IPO dynamics. Facebook had a terrible IPO and. Snap had a great first day [1]. That said, burning an entire class of investors (retail) on day one, particularly for a brand like Lyft, isn't a great show. It's also reasonable to call out the bookrunner, JPMorgan, as a bad choice for future IPOs. [1] https://www.cnbc.com/2017/03/02/snapchat-snap-open-trading-price-stock-ipo-first-day.html https://www.cnbc.com/2017/03/02/snapchat-snap-open-trading-p...
    - 8y ago
Havoc 8y ago
Options, specifically put options available on Thursday. Judging by reddit, everyone and their dog wants in on that.
Animats 8y ago
Too soon. Bottom fell out on Monday. Update.[1] [1] https://www.nytimes.com/2019/04/01/technology/lyft-stock.html https://www.nytimes.com/2019/04/01/technology/lyft-stock.htm...
rb808 8y ago
Lyft is a little down. By the time Uber IPOs no one will want to touch it. Hopefully this is the end of dotcom boom II.
JumpCrisscross 8y ago
JPMorgan priced this like a bag of numpties. They had a range in 62 to 68, but caved to pressure and jacked the price. Early investors are fine--if they had sense, they sold some before the IPO. Same with employees. But retail got screwed, and that's a shame for Lyft's long-term prospects amongst those investors, as well as for upcoming B2C IPOs, e.g. Uber, Airbnb and Pinterest.
- freewilly1040 8y ago
  I don’t understand this expectation that retail investors should get a decent profit on a stock they bought days ago. It was priced at 72, went up a bunch, and is now down less than 5% from what they offered it at. It all seems... fine?
  - JumpCrisscross 8y ago
    > I don’t understand this expectation that retail investors should get a decent profit on a stock they bought days ago I don't have that expectation. IPOs are risky. IPOs of massively loss-making companies' non-voting stock are riskier still. But when two sets of investors--on institutional and one retail--bought stock within days of each other, under similar informational and macroeconomic circumstances, and one of those groups (the latter) was prohibited from buying at the price the other (the former) bought at, and a single institution is the arbiter of the price at which bucket A buys and sells, and bucket B gets screwed to the tune of 20% on a day the general markets rose, it's a reason to call out the bookrunner as a numpty. Particularly for a name, like Lyft, that will disproportionately depend on retail investors buying their stock for months to come.
    - sk5t 8y ago
      Well, so? Who was holding a gun to retail investors' heads to buy on Friday? Today's sitters-out can be tomorrow's reasonably-satisfied long investors.
dawhizkid 8y ago
No idea why anyone would hold at least until the lockup period expires.
idlewords 8y ago
Instantly burning through invested money seems pretty on-brand for Lyft.
gremlinsinc 8y ago
Didn't lyft itself say they have no idea if they can get to profitability? Wouldn't it make more sense to short lyft than invest in them? Ridesharing companies have been burning through investor money, and having a VERY hard time showing any real profits on the books, and with self-driving cars, the manufacturers will become their own rideshare, and likely change the model of car ownership to one of cars on demand.
- philwelch 8y ago
  > with self-driving cars, the manufacturers will become their own rideshare, and likely change the model of car ownership to one of cars on demand You're assuming that manufacturers would do this instead of selling (or even leasing) the cars to companies like Lyft and Uber directly. I don't think this is a sound assumption. Most industries separate operations from manufacturing--shipyards and shipping companies are separate companies; aircraft manufacturing and airlines are separate companies; locomotive manufacturers and railroads are separate companies. If Lyft can barely break even long enough to survive to the invention of self-driving cars, they will be the ones providing cars on demand because that's what they already do.
- stefan_ 8y ago
  Every public company ever files a description of risks that are then turned by media into "X could implode tomorrow". You could short Lyft, but do you have enough money to wait out the people that just saw them raise 20 billion?
- bsder 8y ago
  > Wouldn't it make more sense to short lyft than invest in them? Lyft beat Uber to IPO and raised a bunch of money. If Lyft's stock tanks, Uber will get an extremely depressed IPO and raise far less money while having a far higher burn rate. This could possibly cause Uber to collapse before Lyft and leave Lyft as the remaining big player in the space. In short, the market is likely to remain irrational longer than you can remain solvent.
  - jquery 8y ago
raiyu 8y ago
The stock price drop isn’t exactly surprising. There are heavy losses from last year, another year of tremendous losses this year, and while growth is highly valued there is a difference between losing 5%, 50%, or 90% of revenue in a calendar year. Snap was certainly overvalued at IPO, again heavy losses and very large revenue growth projections. Each quarter that they missed in their MAU growth and/or revenue growth the stock got hammered. It hit a low and now is rebounding to more sensible levels. If they can get their spending more under control and continue their positive revenue growth they will mature into a solid public company. The other challenge for Lyft is that it’s hard to find a comparable. For Snap you have twitter and Facebook so you can estimate the costs it takes to run the operation as well as the potential revenue on a per user basis from two publicly traded companies that have both been in the market for a while. With Lyft what stock would you use as a comparable to better understand their cost structure at scale as well as the proper way to value their customers true LTV? The stock is still trading well above the last private round. I would consider it entering into true bear territory if it starts trading below the last private valuation. Which is what happened to Snap. Then that shows you that valuing a stock on future growth especially at the later stages can be quite dangerous as any misstep is magnified. This is also challenging news for Uber really. Because it has a similar story. Great revenue growth but heavy losses. If anything coming out first was great, they get all of the press and attention. The IPO was a great success internally because they capitalized the company well and given the pop and the receding stock price they didn’t leave any money on the table. Now that they are public it’s going to be about the long game. Given the heavy drop in price, you would expect this to continue for the next several quarters until after the lock up period when more shares will hit the market. They need to keep hitting their numbers with no negative surprises as well. It’s not crazy to see them get adjusted down 30-50% and have the stock settle into a floor before the fundamentals of the business really take over in terms of valuation.

72 points by chollida1 8y ago

Well, it's called an exit for a reason. Essentially, a team of professional financial analysis that have models and experience pricing the stocks, and a knowledgeable PR team, decide the best time and the price to dump the stock onto the market in order to maximize the returns the existing equity holders will get. As a retail investor, you're practically betting against the house here.

harryh 8y ago
The vast majority of the shares owned by the major investors aren't sold on the day of the IPO.
askafriend 8y ago
Early Lyft investors have a 180 day lockup period - same as employees.
- nissimk 8y ago
  Is there any rule or provision preventing them from short selling the stock in another account?
  - nemo44x 8y ago
    Yes that would be a violation of their lockup agreement. They can’t buy/sell puts/calls either.
    - docker_up 8y ago
      How would they be found out though?
      - mandeepj 8y ago
        It's all linked via your SSA
      - dboreham 8y ago
        Through KYC processes? They could theoretically conspire with another person who runs the trade but eventually compensates the principal. They'd only be found out through regular white collar crime fighting measures: parallel construction from NSA sigint for example.
        docker_up 8y ago
        But how would Lyft know that an employee bought puts from E-trade? How is that information shared? I don't think there's any information being exchanged by every single brokerage to Lyft, is there? The lockup agreement is a contractual thing, it's not a legal document. I don't see how Lyft would have the legal rights to search.
        jedberg 8y ago
        How do the police know that you're cooking meth in your basement? They don't, but if you do something dumb or make a lot of money, they tend to find out. It's the same here. Buying/selling options on Lyft as an employee is against their employment contract, and probably SEC rules. If they make a few thousand dollars doing it, chances are no one will find out. If they make a few million, the SEC will probably look into that.
        docker_up 8y ago
        Why is the SEC involved, especially if there's no insider trading involved? What if a Lyft employee quit a few months ago, and then hedges her RSUs with puts? There's no insider trading involved, why would the SEC care?
        asynchrony 8y ago
        Employees are normally forbidden from trading any derivatives, short selling, or even buying shares in a margin account. I’m not sure about the case of an employee that has left the company, but I expect that it would still qualify as insider trading through some window.
  - rongenre 8y ago
    Underwriters insist on a lockup period for a reason. Everyone asks about short selling and options, and the answer is always no.
warp_factor 8y ago
you are right and I'm not sure why you are being downvoted. Most of the 72$ shares sold pre-IPO to retail investors were dumped on IPO day to make a quick profit. The individual investors and employees that are still in LockOut are now holding the falling knife
- vonmoltke 8y ago
  > Most of the 72$ shares sold pre-IPO to retail investors were dumped on IPO day Why do you think any retail investors got shares at $72?
- deleted 8y ago
  [deleted]
- sk5t 8y ago
  > holding the falling knife That is... not how that metaphor works. You want to avoid trying to catch the falling knife by placing a trade that attempts to time the market on a plummeting asset. But if you already hold it, and can't make any trades, well...
monitorman 8y ago
If things were as simple as this, you could then always short IPOs for a while, and the expected value would be positive.
- xiphias2 8y ago
  Actually so far for the last few years at least this strategy was quite profitable. New IPOs significantly underperformed S&P500
- opportune 8y ago
  You can short sell but unfortunately (at least for retail, and to the extent of my knowledge) not trade options in the first week of trading for a newly listed stock. Which is a shame because I 100% would have bought puts in the first hours of trading when I saw the market price surge into the 80s. Lyft's float is pretty low volume so the surge of retail investors trying to add Lyft to their portfolios caused a mini bubble.
- mikestew 8y ago
  I'm sure you haven't looked over historical data, but if you did you'd find this to be a profitable strategy were it not for two problems: finding shares to borrow (a requirement to "short" a stock, because you borrow them and immediately sell), and if you try and fix that problem with buying put options, those won't be available for a week.
- stevedewald 8y ago
  Yes, and the expected value is positive. Unfortunately for us, the banks that underwrite the IPO choose who to allocate the shares to, and they would prefer to allocate them to clients that have a history of not dumping the stock and/or lending shares out for shorts.
  - gruez 8y ago
    You'd think that if the EV was positive, that no one would buy the IPO, and would instead but a few days/weeks later. Why buy before the dip?
  - 8y ago

shhehebehdh 8y ago

> It serves as an important reminder that amid all the hoopla around trading debuts, small investors wind up taking a lot of the risk. Speculators take on a lot of the risk, whether they be small or large.

nostromo 8y ago

> Lyft’s stock market debut has set up its founders, employees, early backers and even those who scored shares in the initial public offering Thursday night for quite a windfall. ... not really? Most of those folks are locked out for several more months and can't sell -- at which point the stock may suffer increased selling pressure, much like Snap. These folks are no more successful now than they were a week ago. Also the IPO price was $72 -- and Lyft is selling at $69 right now, so, no, the institutions that bought the IPO are not having a windfall at present. (But now I see this article was published Friday, before today's continued decline, so I see why this made it past the fact checkers.) I found this simple graphic a great distillation of why Lyft and Uber may be considered overvalued: https://i.imgur.com/z1aCZaX.png https://i.imgur.com/z1aCZaX.png

alexpetralia 8y ago
> the institutions that bought the IPO are not having a windfall at present. This of course depends on when they sell, or sold!
- deleted 8y ago
  [deleted]
deleted 8y ago
[deleted]
ummonk 8y ago
I’d be curious how much stock the IPO institutions sold after the opened. Do they tend to hold on to most of their stock for a long time? It could be that a bunch of people who were unable to participate in the IPO but bought the stock when it became listed on the market and popped were the main losers. Also, that graphic doesn’t make Uber and Lyft seem all that overvalued - does it really seem unusual for Lyft to do as well financially as Delta?
- JumpCrisscross 8y ago
  > does it really seem unusual for Lyft to do as well financially as Delta? Delta's operations threw off $7 billion of cash in their FYE 2018 [1]; Lyft's burned over $280 million [2]. In the same period, Delta's net income was almost $4 billion [a] while Lyft lost over $900 million. Lyft is not doing as well financially as Delta. Instead, its investors are betting that it will--in the future--do much better than Delta is doing today. [1] https://www.sec.gov/ix?doc=/Archives/edgar/data/27904/000002790419000003/dal1231201810k.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/27904/000002... page 56 [a] page 54 [2] https://www.sec.gov/Archives/edgar/data/1759509/000119312519088569/d721841ds1a.htm#fin633517_4 https://www.sec.gov/Archives/edgar/data/1759509/000119312519... F-8 [b] F-4

forkLding 8y ago

Investopedia has a good article on this: https://www.investopedia.com/university/ipo/ipo2.asp https://www.investopedia.com/university/ipo/ipo2.asp

YeahSureWhyNot 8y ago

majority of the investment industry is about pump and dump during next round. as per usual, the unsuspecting retail investors driven by 'advisors' end up holding the bag. what else is new?

jjeaff 8y ago
Add to that, that many/most of the "advisors" work for the same institutions that are making tons on the IPO.

docker_up 8y ago

At this point, every single person who bought Lyft in the last two days is underwater. The only ones who are still above water are the pre-IPO investors and I wonder what their lock-up agreements are. In no way can this be called a success for anyone, it's a terrible IPO.

deminature 8y ago
Every previous tech IPO in the past few years has had a curve like this. Facebook dropped below $20 shortly after IPOing, before starting its long ascent to >$100. Short-term speculators are likely to be burned, but if Lyft does meet expectations in the next few years, long holders will make out well.
m463 8y ago
The purpose of the IPO is to fund the company. Many companies have been railroaded by the banks to price their IPO shares so conservatively that they make relatively little money on the IPO. It may be dwarfed by the amount the banks and investors make in a few days. Taking the long term view, maybe this IPO is just fine. The company gets funds, they grow their business and the stock will rise well over time.
- JumpCrisscross 8y ago
  > The purpose of the IPO is to fund the company IPOs traditionally had four purposes: (1) Introduce a company's securities to public-market investors; (2) Price said securities; (3) Let existing investors sell; and (4) Raise money for the company. > Taking the long term view, maybe this IPO is just fine Analysts overstate the importance of IPO dynamics. Facebook had a terrible IPO and. Snap had a great first day [1]. That said, burning an entire class of investors (retail) on day one, particularly for a brand like Lyft, isn't a great show. It's also reasonable to call out the bookrunner, JPMorgan, as a bad choice for future IPOs. [1] https://www.cnbc.com/2017/03/02/snapchat-snap-open-trading-price-stock-ipo-first-day.html https://www.cnbc.com/2017/03/02/snapchat-snap-open-trading-p...
  - 8y ago

Havoc 8y ago

Options, specifically put options available on Thursday. Judging by reddit, everyone and their dog wants in on that.

Animats 8y ago

Too soon. Bottom fell out on Monday. Update.[1] [1] https://www.nytimes.com/2019/04/01/technology/lyft-stock.html https://www.nytimes.com/2019/04/01/technology/lyft-stock.htm...

rb808 8y ago

Lyft is a little down. By the time Uber IPOs no one will want to touch it. Hopefully this is the end of dotcom boom II.

JumpCrisscross 8y ago

JPMorgan priced this like a bag of numpties. They had a range in 62 to 68, but caved to pressure and jacked the price. Early investors are fine--if they had sense, they sold some before the IPO. Same with employees. But retail got screwed, and that's a shame for Lyft's long-term prospects amongst those investors, as well as for upcoming B2C IPOs, e.g. Uber, Airbnb and Pinterest.

freewilly1040 8y ago
I don’t understand this expectation that retail investors should get a decent profit on a stock they bought days ago. It was priced at 72, went up a bunch, and is now down less than 5% from what they offered it at. It all seems... fine?
- JumpCrisscross 8y ago
  > I don’t understand this expectation that retail investors should get a decent profit on a stock they bought days ago I don't have that expectation. IPOs are risky. IPOs of massively loss-making companies' non-voting stock are riskier still. But when two sets of investors--on institutional and one retail--bought stock within days of each other, under similar informational and macroeconomic circumstances, and one of those groups (the latter) was prohibited from buying at the price the other (the former) bought at, and a single institution is the arbiter of the price at which bucket A buys and sells, and bucket B gets screwed to the tune of 20% on a day the general markets rose, it's a reason to call out the bookrunner as a numpty. Particularly for a name, like Lyft, that will disproportionately depend on retail investors buying their stock for months to come.
  - sk5t 8y ago
    Well, so? Who was holding a gun to retail investors' heads to buy on Friday? Today's sitters-out can be tomorrow's reasonably-satisfied long investors.

dawhizkid 8y ago

No idea why anyone would hold at least until the lockup period expires.

idlewords 8y ago

Instantly burning through invested money seems pretty on-brand for Lyft.

gremlinsinc 8y ago

Didn't lyft itself say they have no idea if they can get to profitability? Wouldn't it make more sense to short lyft than invest in them? Ridesharing companies have been burning through investor money, and having a VERY hard time showing any real profits on the books, and with self-driving cars, the manufacturers will become their own rideshare, and likely change the model of car ownership to one of cars on demand.

philwelch 8y ago
> with self-driving cars, the manufacturers will become their own rideshare, and likely change the model of car ownership to one of cars on demand You're assuming that manufacturers would do this instead of selling (or even leasing) the cars to companies like Lyft and Uber directly. I don't think this is a sound assumption. Most industries separate operations from manufacturing--shipyards and shipping companies are separate companies; aircraft manufacturing and airlines are separate companies; locomotive manufacturers and railroads are separate companies. If Lyft can barely break even long enough to survive to the invention of self-driving cars, they will be the ones providing cars on demand because that's what they already do.
stefan_ 8y ago
Every public company ever files a description of risks that are then turned by media into "X could implode tomorrow". You could short Lyft, but do you have enough money to wait out the people that just saw them raise 20 billion?
bsder 8y ago
> Wouldn't it make more sense to short lyft than invest in them? Lyft beat Uber to IPO and raised a bunch of money. If Lyft's stock tanks, Uber will get an extremely depressed IPO and raise far less money while having a far higher burn rate. This could possibly cause Uber to collapse before Lyft and leave Lyft as the remaining big player in the space. In short, the market is likely to remain irrational longer than you can remain solvent.
- jquery 8y ago

raiyu 8y ago

The stock price drop isn’t exactly surprising. There are heavy losses from last year, another year of tremendous losses this year, and while growth is highly valued there is a difference between losing 5%, 50%, or 90% of revenue in a calendar year. Snap was certainly overvalued at IPO, again heavy losses and very large revenue growth projections. Each quarter that they missed in their MAU growth and/or revenue growth the stock got hammered. It hit a low and now is rebounding to more sensible levels. If they can get their spending more under control and continue their positive revenue growth they will mature into a solid public company. The other challenge for Lyft is that it’s hard to find a comparable. For Snap you have twitter and Facebook so you can estimate the costs it takes to run the operation as well as the potential revenue on a per user basis from two publicly traded companies that have both been in the market for a while. With Lyft what stock would you use as a comparable to better understand their cost structure at scale as well as the proper way to value their customers true LTV? The stock is still trading well above the last private round. I would consider it entering into true bear territory if it starts trading below the last private valuation. Which is what happened to Snap. Then that shows you that valuing a stock on future growth especially at the later stages can be quite dangerous as any misstep is magnified. This is also challenging news for Uber really. Because it has a similar story. Great revenue growth but heavy losses. If anything coming out first was great, they get all of the press and attention. The IPO was a great success internally because they capitalized the company well and given the pop and the receding stock price they didn’t leave any money on the table. Now that they are public it’s going to be about the long game. Given the heavy drop in price, you would expect this to continue for the next several quarters until after the lock up period when more shares will hit the market. They need to keep hitting their numbers with no negative surprises as well. It’s not crazy to see them get adjusted down 30-50% and have the stock settle into a floor before the fundamentals of the business really take over in terms of valuation.