Notes about the IPO I've been collecting....<p>- Opens at $87.24, IPO at $72.00<p>- raised about $2.34 Billion in cash<p>- unlike hte SNAP IPO, this one has some buy ratings<p>- lock up date of Sept 2nd<p>- company valued at $25Billion, though note the financial engineering of a relatively small float that helps push up the stock price.<p>- upsized offer from 30.8M shares to 32.5M( around 11% of float, this is a relatively small float)<p>Groupon tried this kind of financial engineering to prop up a bad business, it didn't go well then<p>- valued at 10x 2018 revenue, wow, given the losses, wow.<p>- CEO won't talk about how they'll become profitable, now that they are out of the IPO window that's a bit of a worrying trend, though clearly Wall St doesn't seem to currently care<p>- no international expansion plans outside of Canada
> "We may choose to do that some day but we don't have current plans."<p>-now trading below its opening trade, not to be confused with its opening price.<p>Uber had better IPO this year.<p>By Year end Lyft will have reported 3 times so investors will start to look for losses to shrink and see a path to profitability. Lyft Share lock ups will also be off so Lyft will get some selling pressure.<p>If Lyft can't support the high valuation it currently has 9-12 months out then Uber had better have a better story than "we're Lyft but bigger".<p>I'd expect to see an S-1 from uber in April and an IPO by the end of the summer to avoid this scenario.
Can some kind soul please explain to me why <i>popping</i> on the first day is considered to be a good thing? Isn't the company leaving the money on the table for investment banks and their rich clients if they do not sell their shares at an optimal price?
$SNAP "popped" 40% when it IPOed: <a href="https://money.cnn.com/2017/03/02/technology/snapchat-ipo/index.html" rel="nofollow">https://money.cnn.com/2017/03/02/technology/snapchat-ipo/ind...</a><p>It now trades at less than half of that.
The underwriters should have priced the deal higher so the company would have more money to invest. Pop is a handout to favored clients of the underwriters (or a subsidy to encourage them to subscribe).<p>It's like the VCs having the company pay its legal bill when doing a deal: less of the LP's money for the company to invest, while they get to pocket the money the LPs <i>did</i> give the firm for this purpose (management fee -- the 2% of "2 and 20").<p>And the press describes the pop as a <i>good</i> thing. It's underwriter malpractice.
I don't know about anyone else, but I'm prepared to open up a huge short position when Lyft gets to about 90. No way this thing will keep going up.
Seeing that IPOs are designed to pop, I don’t find it that surprising.<p>The naive way to look at an IPO that pops the first day of trading is that the investment bankers left a lot of money on the table and the company got screwed. But if an IPO was set at a fair price (the price after the first day of trading), the company might have a hard time generating the pre-IPO demand in the first place for their roadshow. After all, the only reason to subscribe to an IPO and get pre-allocated shares is to make some juicy risk-free returns.<p>So the company makes the explicit choice to trade off short-term profits for short-term (but hopefully longer) artificially induced demand.<p>The bankers win by allocating shares to investors they like hoping that the favor will be returned in the form of business in the future (on top of the fat fee they make). The subscribed investors win by the risk-free return. The company wins be inducing demand.<p>This has been the process and the incentives that have governed IPOs for a long long time. It’s interesting that this process might be supplanted with direct listings or auctions ala Spotify or Google.
Obligatory: underwriters usually price IPOs at a discount (called "underpricing") and preferred investors get the benefit of that in this early "pop."