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> Lyft now at $61/share, ouch, there just is no other way to put it. THey pulled a lot of financial engineering tricks to boost their IPO price and well the res

> Lyft now at $61/share, ouch, there just is no other way to put it. THey pulled a lot of financial engineering tricks to boost their IPO price and well the results speak for themselves:( I don't understand why this is seen as a negative. An IPO is a share issuance — the higher the price per share, the more money they receive in exchange for the same percentage of the company. Post-IPO "pops" represent money left on the table, effectively a transfer to the high-dollar investors with connections to the underwriter who can buy at the issue price.

BinaryIdiot 8y ago
While you're right in general about a pop, that doesn't really apply to Lyft. Their IPO price was $72 and they're now hovering around $60. They had an initial pop up to around $75 IIRC and then have been on a steady decline since.
deleted 8y ago
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nostrademons 8y ago
It's a good thing for Lyft-the-corporation but a bad thing for anyone who bought into the IPO. Any sort of financial engineering tricks that goose the accounting numbers without affecting the long-term health of the business are basically a transfer payment from people who buy in at the inflated price to entities who sell at the inflated price. It's rational for the company to try to pull them; it's also rational for prospective shareholders to refuse to take the other side of the trade (at least until the price corrects to the point where the true fundamentals make it worth it). In today's markets, you can always find someone irrational.
- johannes1234321 8y ago
  > It's a good thing for Lyft-the-corporation but a bad thing for anyone who bought into the IPO. Which in turn is and for the company since the new co-owners (shareholders) don't want to lose money but push the executives to "do something" (while in reality even combined most of the new shareholders don't have much voting power
- ctlby 8y ago
  > It's rational for the company to try to pull them Aren't there issues with follow-on offerings? By taking the entire IPO pot for itself, the company will probably struggle to find investors if/when it needs to come back to the capital markets--which seems like an eventuality with Lyft.
  - nostrademons 8y ago
    Potentially, but for high-growth unprofitable companies management is usually betting that they can either use the extra money raised to fix the fundamentals of the business in time for the next capital raise, or else they need to dump their stocks on the public market and get out because there won't be a next capital raise. I'd bet that #1 is more common in the management team's head, but #2 is more common in reality.
- dman 8y ago
  Think about morale at Lyft. You have employees locked in who cant sell for first couple of months. They are seeing their networth plummet everyday.
  - ahakki 8y ago
    Should've bought options to hedge.
    - rongenre 8y ago
      It's against any competently worded lockup agreement. "“Derivatives” is sort of a vague term, and there is a persistent folk belief that they have magic powers, that any legal or financial problem can somehow be solved by doing a derivative." https://www.bloomberg.com/opinion/articles/2019-04-08/lyft-is-angry-about-lockups https://www.bloomberg.com/opinion/articles/2019-04-08/lyft-i...
      - usaar333 8y ago
        Lyft's common stockholder market standoff agreement doesn't bar hedging. See the s1.
        vecter 8y ago
        But employees are forbidden to hedge. Source: am one.
    - Falcorian 8y ago
      They are almost certainly not allowed by their employment contract.
    - tyrust 8y ago
      Contractual limitations mentioned by a couple other people aside, options aren't even available until 5 days after IPO. http://www.theoptionsguide.com/criterias-to-list-stock-options.aspx http://www.theoptionsguide.com/criterias-to-list-stock-optio...
- jjeaff 8y ago
  It's also a bad thing for all the employees and investors as they have 180 day lock-in before they can cash out.
  - temporalparts 8y ago
    I don't think how one dresses up financials will have an impact on the stock price 6 months out; there will likely 2 quarters of earning reports (at least 1) which will dictate the price then, not what was released now.
mathattack 8y ago
If you miss too badly, you hurt your ability to go to the market in the future. In the extreme you open yourself to lawsuits and activist investors. In general the big Pops only help the banks and their top investors.
fullshark 8y ago
Try hiring great talent with a tanking public stock.
alexnewman 8y ago
Perhaps when large companies issue options at ipo they should expect this type of behavior.
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thisisit 8y ago
Because this is a public market? One of things you expect companies to do, ethically speaking, is to provide honest information wherever possible. If Lyft used financial engineering to boost their IPO price, while they get money in loads while the average Joe loses.

BinaryIdiot 8y ago

While you're right in general about a pop, that doesn't really apply to Lyft. Their IPO price was $72 and they're now hovering around $60. They had an initial pop up to around $75 IIRC and then have been on a steady decline since.

deleted 8y ago

[deleted]

nostrademons 8y ago

It's a good thing for Lyft-the-corporation but a bad thing for anyone who bought into the IPO. Any sort of financial engineering tricks that goose the accounting numbers without affecting the long-term health of the business are basically a transfer payment from people who buy in at the inflated price to entities who sell at the inflated price. It's rational for the company to try to pull them; it's also rational for prospective shareholders to refuse to take the other side of the trade (at least until the price corrects to the point where the true fundamentals make it worth it). In today's markets, you can always find someone irrational.

johannes1234321 8y ago
> It's a good thing for Lyft-the-corporation but a bad thing for anyone who bought into the IPO. Which in turn is and for the company since the new co-owners (shareholders) don't want to lose money but push the executives to "do something" (while in reality even combined most of the new shareholders don't have much voting power
ctlby 8y ago
> It's rational for the company to try to pull them Aren't there issues with follow-on offerings? By taking the entire IPO pot for itself, the company will probably struggle to find investors if/when it needs to come back to the capital markets--which seems like an eventuality with Lyft.
- nostrademons 8y ago
  Potentially, but for high-growth unprofitable companies management is usually betting that they can either use the extra money raised to fix the fundamentals of the business in time for the next capital raise, or else they need to dump their stocks on the public market and get out because there won't be a next capital raise. I'd bet that #1 is more common in the management team's head, but #2 is more common in reality.
dman 8y ago
Think about morale at Lyft. You have employees locked in who cant sell for first couple of months. They are seeing their networth plummet everyday.
- ahakki 8y ago
  Should've bought options to hedge.
  - rongenre 8y ago
    It's against any competently worded lockup agreement. "“Derivatives” is sort of a vague term, and there is a persistent folk belief that they have magic powers, that any legal or financial problem can somehow be solved by doing a derivative." https://www.bloomberg.com/opinion/articles/2019-04-08/lyft-is-angry-about-lockups https://www.bloomberg.com/opinion/articles/2019-04-08/lyft-i...
    - usaar333 8y ago
      Lyft's common stockholder market standoff agreement doesn't bar hedging. See the s1.
      - vecter 8y ago
        But employees are forbidden to hedge. Source: am one.
  - Falcorian 8y ago
    They are almost certainly not allowed by their employment contract.
  - tyrust 8y ago
    Contractual limitations mentioned by a couple other people aside, options aren't even available until 5 days after IPO. http://www.theoptionsguide.com/criterias-to-list-stock-options.aspx http://www.theoptionsguide.com/criterias-to-list-stock-optio...
jjeaff 8y ago
It's also a bad thing for all the employees and investors as they have 180 day lock-in before they can cash out.
- temporalparts 8y ago
  I don't think how one dresses up financials will have an impact on the stock price 6 months out; there will likely 2 quarters of earning reports (at least 1) which will dictate the price then, not what was released now.

mathattack 8y ago

If you miss too badly, you hurt your ability to go to the market in the future. In the extreme you open yourself to lawsuits and activist investors. In general the big Pops only help the banks and their top investors.

fullshark 8y ago

Try hiring great talent with a tanking public stock.

alexnewman 8y ago

Perhaps when large companies issue options at ipo they should expect this type of behavior.

deleted 8y ago

[deleted]

thisisit 8y ago

Because this is a public market? One of things you expect companies to do, ethically speaking, is to provide honest information wherever possible. If Lyft used financial engineering to boost their IPO price, while they get money in loads while the average Joe loses.