Morning Report: Secondary Transactions Said To Weigh On Uber, Bolster Lyft

Morning Report: Following Uber’s recent struggles and Lyft’s recent fundraising, the market is dinging one and rewarding the other. Can you guess which is which?

You could argue that Uber should be worth more following the ouster of its now-former CEO Travis Kalanick. You could also argue the opposite; it isn’t too hard to come up with a logical progression in which it was better for shareholder value to keep Travis atop the company, internal issues be damned.

The point is, if I asked you to, you could write a decent paragraph making either point. Happily, you and I don’t have to go through that exercise, read each, and decide which makes the most or least sense. The market, instead, is guiding us. At least some.

According to TechCrunch’s Connie Loizos, movements in the secondary market are painting a picture of worth today, for both Uber and Lyft.

Here’s the key Uber riff:

• […] Uber is right now valued at roughly $50 billion by secondary shareholders — a far cry from the $68 billion that its primary investors have assigned it. Such a fall is especially notable given that last year, secondary investors were willing to pay full freight — even a premium — for any Uber shares they could lasso.

And the same regarding Lyft:

• [T]he typical 20 percent discount assigned to shares by secondary purchasers has, in Lyft’s case, dropped to between 13 and 9 percent, as buy-side interest grows and existing shareholders hang on for the ride.

Now, as you can see, this isn’t exactly a deficit versus premium situation. Instead, both companies are trading below their last-private valuations, with that situation being newer to Uber, and a declining state of affairs for Lyft. A declining deficit, of course, is a double negative; Lyft is heading north.

All this could be silly gyrations by skittish shareholders, or it could be opportunistic buyers looking for a bargain. We’ll know more when either is materially repriced by investors who buy a piece of their equity. But, as Uber has billions in the bank, and Lyft raised $600 million just a few months ago, that won’t be for a minute.

Wouldn’t it be nice if these firms were publicly traded so that we could better see their changing value in real time?

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