
Lyft Crashes Below IPO Price - jcfrei
https://www.koyfin.com/charts/gip/LYFT
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spyspy
“Volatile hype stock has volatile hype stock-like trading activity during a
classically volatile trading period.”

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artwr
Thanks for the appropriate TL;DR

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

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hjk05
“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?

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riphay
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.

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perlgeek
> 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.

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dawhizkid
Honestly 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.

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aetherson
Uber (btw: did the all-caps and dollar sign add to the readability of your
post?) is also much more expensive than Lyft is. At some point, you have to
decide how much more you want to pay for a company to chase down inherently
less-lucrative markets.

I think that Uber's self-driving technology is worth negative dollars.

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nickles
> did the all-caps and dollar sign add to the readability of your post?

This is a standard way to denote stock symbols.

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nikanj
Uber doesn't have one though, seeing as how they aren't publicly listed

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shin_lao
It'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.

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smolsky
Well, 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.

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nicolashahn
"Crashes" from IPO of $72 to $70.60 at the time of this writing. Okay.

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dawhizkid
Well it opened at $87 on Friday, so it's a 20% drop since opening.

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deminature
It's still almost double the last private valuation. It was $10bn prior to
IPO, now north of $20bn, peaking at almost $25bn.

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dawhizkid
For now...I mean it's been 2 days. Let's see after the first earnings report.

Remember employees are still in a lock-up period, so really no one who is
holding right now really cares until 6 months from now.

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GolfyMcG
I 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.

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shereadsthenews
Good for them for taking all the money off the table. There's nothing dumber
than an IPO that pops.

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ratling
IMO this means nothing. Facebook did the same thing.

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notyourday
Facebook was profitable or at least cashflow positive if I recall correctly.

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charlesdm
And it still dropped more than 50% in the first year

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huac
on 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.

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rb808
Is 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.

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mandevil
As 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.

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olivermarks
'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...

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a-wu
I thought a lot of tech stocks did this immediately after IPO as the pre-IPO
shareholders sold off their shares?

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shereadsthenews
That'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.

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swarnie_
Company 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
=(

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dawhizkid
which city has 4 different rideshare companies in operation?

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caniszczyk
Austin at least 4... Uber, Lyft, Wingz, RideAustin

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criddell
This 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?

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sowbug
There's nothing stopping you from writing a Facebook clone. But it won't
succeed. Why not?

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EpicEng
Except 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.

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treis
Drivers care that lots of people use Uber and you care that lots of drivers
use Uber. So there's definitely a network effect. It's just a lot weaker than
something like Facebook because I don't care how many Uber drivers there are
in Memphis if I'm in Salt Lake City. It's even weaker than that because the
geographic area is more like "within 10 minutes of me". You can see a
competitor relatively easily getting a toe hold by starting service at a
specific time for a specific area. For example, the popular bar street on
Friday/Saturday nights.

The problem comes with your "a dollar less" caveat. You star EpicEng's ride
share and undercut Uber/Lyft by a dollar. They respond by matching your price
and giving drivers more incentives so they don't switch. Now what do you do?

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EpicEng
I can assure you that I do not personally care that people use Uber, but
that's neither here nor there. What you describe is not a network effect; it's
true of _any_ business you want to see stay in business. If I liked shopping
at e.g. Walmart, yes, I would implicitely want others to shop there as I don't
want to see them go out of business. That doesn't mean I'd have a second
thought about switching to a competitor if they provided a similar service at
a lower price.

FB is successful because no one I interact with is on a different platform.
They same is true for them, so we all stay. Network effect.

