Lyft Slips Under Its IPO Price, Diminishing Its Unicorn-Positive Narrative

Morning Markets: Lyft’s strong debut took a hit this morning as the ridehailing company’s share price shed over 10 percent in morning trading, falling under its IPO price. 

Subscribe to the Crunchbase Daily

After a strong pricing run, big demand, and a dramatic opening price, Lyft’s shares have already lost their shine, falling over $17 from highs. Lyft’s current $69.67 per-share value is also more than $2 less than its $72 IPO price.1

To be fair, if Lyft’s raised price range, final price at the top of that raised range, and neat first-day pop were bullish, seeing the company’s share price dip about 11 points this morning is bearish.

Perspectives

There are two ways to think about Lyft’s surprising, and disappointing declines this morning. Let’s first look at it from Lyft’s perspective.

Sticking with Lyft, its falling value is only so bad. The company’s IPO now looks masterfully-priced, allowing the decacorn to raise the stiff sheaf of cash needed to fund its growth. And with its IPO complete, the company is done fundraising for some time, having just picked up around $2.4 billion. So its share price is now something that impacts shareholders (a group which includes, to be clear, employees), but not the day-to-day operations from a cash perspective.

Lyft raised probably about as much as it could have, and that’s a good pricing return for an IPO that was a fundraising event.

The second perspective we’ll look at it is from the view of other companies looking to go public who sport similarly high valuations to Lyft, with similar approaches to balancing growth and losses.

For other companies, it’s a bit less good. Lyft’s IPO is done, and so it doesn’t need to worry about the IPO window anymore, or the level of market demand for new unicorn shares. Other companies — and the list is huge — do. So Lyft’s stumble is now part of their life, their IPO march, and their own pricing dance.

All that is especially resonant for Uber, a Lyft competitor with an impending IPO. Uber, like Lyft, has a history of quick growth and stubborn losses. If Lyft sinks in the public markets, the value that Uber will be able to achieve during its own IPO could fall. That could limit its ability to raise.

But let’s stop there. Lyft’s stock could recover. But from Friday’s hype to today’s double-digit fall, some of the positive narrative that Lyft had spun for its unicorn brethren has unraveled. What happens next is up to the market.