Lyft's initial public offering of 32.5 million shares was priced at $72 per share on Thursday. This would value the company at more than $20 billion and hit the top of its expected range. Shares in the ride-hailing company are expected to start trading on the Nasdaq on Friday, under the ticker "LYFT." The company faces formidable competition from Uber, according to its S-1 filing released earlier this month. Lyft claimed 39 percent of the U.S. market at the end 2018, up 17 percentage points over two years, it said in the filing. In 2018, Lyft reported: Net loss: $911 million, wider by 32 percent from 2017 Revenue: $2.2 billion, double the revenue it saw in 2017 Bookings: $8.1 billion, an increase of 76 percent from 2017 Funded early on by venture firms including Floodgate, K9 Ventures, Mayfield Fund, and Peter Thiel's Founders Fund, Lyft is one of several maturing tech start-ups expected to go public this year. Others expected to go public in 2019 include Uber, Pinterest, Zoom and Slack. (Uber, Lyft's chief rival, is expected to release its S-1 and go public next month.) Founded by CEO Logan Green and President John Zimmer in 2007, Lyft launched its ride-hailing app in 2012. In its earlier years, Lyft operated a service called Zimride that focused on long-distance, shared car rides and car-sharing programs on college campuses. Lyft has been named to the CNBC Disruptor 50 List three times, ranking fifth on the 2018 list. J.P. Morgan, Credit Suisse and Jefferies are the lead underwriters of the offering. WATCH: Lyft IPO will encourage others to go public<doc-sep>Bloomberg (Bloomberg) -- The prediction was vintage Jack Ma, as provocative as it was prescient.“This is the era of the internet,” the Chinese billionaire proclaimed in October 2013, just weeks after his plan to take Alibaba Group Holding Ltd. public in Hong Kong had been scuttled by regulators. “It no longer belongs to Li Ka-shing.”Ma’s dig at the famed Hong Kong tycoon raised plenty of eyebrows at the time, but few would disagree with him now. The past few years have seen a remarkable shift in fortunes between China’s tech-savvy moguls and their old-school Hong Kong counterparts -- a trend that shows few signs of fading any time soon.Even as Xi Jinping’s government moves to curb the clout of Ma and some of his peers, the combined wealth of China’s 10 richest people has surged threefold since 2016 to $425 billion, according to the Bloomberg Billionaires Index. For Hong Kong, it doubled to $218 billion during the same period. Li, once Asia’s richest person, is now ranked No. 13, several spots below Ma, who eventually listed Alibaba in New York in 2014.The changes underscore the fading relevance of Hong Kong businessmen who built their empires on real estate, ports, infrastructure, telecommunications, aviation and retail.At their peak, when the former British colony was the indispensable gateway to a rapidly developing mainland China, Li and his peers were courted by Beijing for their business acumen and access to overseas capital. These days their political clout is waning and their businesses are increasingly viewed by investors as stale.What’s more, Hong Kong’s future as a financial hub is facing an existential threat as China’s Communist Party chips away at the “one country, two systems” framework that has underpinned the city’s success for decades.One consequence has been a dramatic slide in the stock-market valuations for Hong Kong’s biggest conglomerates. Over the past five years, five of the city’s top groups -- CK Hutchison Holdings Ltd., New World Development Co., Henderson Land Development Co., Sun Hung Kai Properties Ltd. and Wharf Holdings Ltd. -- have consistently traded at deep discounts to their net assets.Their shares now fetch just 0.5 times book value on average, versus 10 for the five companies controlled by some of China’s richest tycoons, data compiled by Bloomberg show.“The main businesses of the large Hong Kong companies don’t have much growth,” said Andy Wong, founding partner at LW Asset Management in the city. “Investors prefer to focus on growth more than on a company’s value,” he said, adding technology-driven sectors are attractive, especially after the pandemic.While private family offices of some of the city’s tycoons have pivoted to high-growth investments, their listed businesses have been slow to catch up. On the other hand, their counterparts across the border have leveraged technology to provide a range of consumer services and create wealth. Chinese tycoons have also benefited from the $14.3 trillion economy’s quick recovery from Covid. China was the only major economy to expand last year, while Hong Kong saw back-to-back contractions in 2019 and 2020.Most of China’s richest billionaires come from the tech industry, including Tencent Holdings Ltd.’s Pony Ma, Bytedance Ltd. founder Zhang Yiming and NetEase Inc.’s William Ding. The wealth of Zhong Shanshan, China’s current richest person and founder of bottled water giant Nongfu Spring Co. is almost $69 billion, more than double that of Li’s.Many of Hong Kong’s business empires owe their success to government policies that encouraged only a small group of deep-pocketed developers to bid at auctions of land parcels, a system that turned Hong Kong into the world’s most expensive property market. The windfall from rising prices allowed the tycoons to diversify into utilities, retail, ports and infrastructure.But that formula has been difficult to replicate in larger markets like mainland China due to high capital requirements, local competition and regulatory barriers, said Richard Harris, founder of Hong Kong-based Port Shelter Investment Management.For instance, Sun Hung Kai Properties Ltd.’ land bank in mainland China is just about 2.3% of that held by Country Garden Holdings Co. owns, a Guangdong-based developer controlled by billionaire Yang Huiyan.The result is that many of the city’s tycoons have focused on defending their current turf rather than expanding into new businesses, Harris said. “Many of them are quite happy making sure they don’t lose” what they have, he said.Yet even that has proven difficult in recent years as Hong Kong’s economy was battered by anti-government protests and the pandemic.Sun Hung Kai Properties, the developer led by billionaire brothers Raymond and Thomas Kwok, reported the biggest decline in underlying profit since 2013 for the year ended June. Swire Pacific Ltd., one of city’s two centuries-old British trading firms, recorded an underlying loss last year, the first since listing in 1959. Its flagship Cathay Pacific Airways Ltd. is struggling despite a government-led rescue.CK Hutchison, the flagship of the diversified empire Li built after his family fled to Hong Kong from the mainland as refugees in 1940, saw its first profit drop since a revamp of the conglomerate in 2015. As tensions rise between China and the West, the CK group is facing headwinds overseas. Australia blocked it from acquiring a local gas pipeline operator over national security concerns in 2018.Some of Hong Kong’s conglomerates have started looking further afield for growth opportunities. New World Development Co., which is into infrastructure building, hotels and shopping malls, is accelerating its expansion into insurance, health care and education in mainland China. Chief Executive Officer Adrian Cheng has said he wants to grow the non-property service businesses. Much of the effort “revolves around non-traditional businesses,” a spokeswoman said.Swire Pacific is investing in health-care groups in mainland China. Jardine Matheson Holdings Ltd., the owner of luxury hotel group Mandarin Oriental International Ltd., is partnering with private equity firm Hillhouse Capital Management Ltd. to look for investment opportunities in Greater China and Southeast Asia.Representatives for Sun Hung Kai declined to comment, while CK group and Wharf didn’t respond to requests for comment. Swire said the group’s financial strength and ability to invest remain strong, and is looking at new sectors.<doc-sep>Morgan Stanley is trying to distance itself from its role in helping early Lyft investors bet against the ride-hailing company after Lyft threatened to sue them and report them to regulators, The Post has learned. On Monday, The Post reported that Morgan Stanley, the lead underwriter for Uber’s upcoming IPO, had been helping Lyft’s pre-IPO investors protect against a decline in the stock — despite “lock-up” agreements intended to block those investors from betting against the company in the wake of its public stock offering. Three sources — including an insider at Morgan Stanley and a pre-IPO investor who hedged through the bank — confirmed that Morgan Stanley was involved in the bets. On Thursday — three days after The Post story ran — Morgan Stanley requested that the story be updated to include a statement denying the bank participated in hedging activity tied to Lyft. “Morgan Stanley did not market or execute total return or hedging products, or any short product on Lyft shares,” the statement said. “We did not execute, directly or indirectly, a short sale for anyone identified by the company or otherwise known to us to be the subject of a Lyft lock-up agreement.” But sources, including the pre-IPO investor who hedged through Morgan, continue to insist the hedges happened. “We bought stock in a special acquisition vehicle and then the individual investors in the special acquisition vehicle shorted shares through Morgan Stanley,” according to the pre-IPO investor. “Morgan Stanley provided most of the borrow to short the stock.” Now it has emerged that Morgan Stanley’s denial comes on the heels of a harshly worded letter by Lyft questioning whether Morgan Stanley engaged in “tortious interference,” according to a copy of the April 2 letter obtained by The Post. Lyft’s letter, which was first reported by The Information, also threatened legal action and warned of potential regulatory repercussions. The Financial Industry Regulatory Authority has started collecting information about Lyft’s trading, a source with direct knowledge of the situation told The Post. Meanwhile, Morgan was still offering the bets, known as total return swaps, as of Friday evening, one Wall Street executive briefed on the transaction told The Post. “That’s a relatively unethical thing to do, and it’s not normal,” this person said, adding that it is also not illegal. Lyft was one of the most hotly anticipated IPOs of 2019. Shares of the oversubscribed IPO soared 21 percent immediately after their Nasdaq debut on March 29 — before appetite to short the stock grew. “It’s Uber’s dirty tricks being employed,” a source familiar with Lyft’s thinking told The Post, noting that Morgan Stanley is Uber’s lead IPO underwriter. The stock has regained its footing, closing at $74.45 Friday. Pre-IPO investors are contractually barred from reducing their “economic interest” in Lyft for six months, which includes shorting the stock. But sources say Lyft investors worked around the lock-up language by positioning the bets so that they won’t benefit from a decline or a rise in the stock. Instead, they simply lock in their IPO gains, which were significant. Reps from Lyft declined to comment. Morgan Stanley declined further comment.<doc-sep>Ken Fisher USA TODAY Ride-sharing giant Lyft had its initial public offering (IPO) last week. Archrival Uber and other big-name, billion-dollar techies should follow soon. Investors see big bucks: They'll buy an IPO and ride the next Amazon to unfathomed heights. In the 1980s, that dream meant getting in on the ground floor of the next Apple. Now it’s the next Google or Facebook. My advice: Don’t waste your time – or money. In my 1987 book, "The Wall Street Waltz," I detailed why IPO really means "It’s Probably Overpriced." Thirty-two years and one huge dot-com crash later, many missed the memo. Folks only remember the super winners like Apple and Intel. They forget the flame-outs like Pets.com, Webvan and, well, the majority. Average all IPOs, and returns are sad. Early booms usually bust. Few winners University of Florida professor Jay Ritter studied IPOs launching from 1980 through 2017. The facts? After the initial pop, IPOs trailed similarly sized peers by an average 3.3 percent a year over their first five years. As with most speculative investments, a few winners mask legions of laggards. IPOs often rise out of the gate, sometimes hugely. Thank investment bankers for that. Those handling the IPO get big bucks for hyping the sale and attracting buyers. So they whip up a mindless frenzy. The excitement and lure of magic returns suck in otherwise rational folks. The party can last days, even weeks, as stories of quick gains attract suckers who hate missing out. But when it stops, the stocks often get clobbered. Even long-term winners like Apple and Facebook spent time in the wilderness after debuting. Looking for a home? Where the most affordable housing market, least expensive homes are in each state The downside of Social Security:Social Security is a lifesaver but far from perfect. Here are 3 rules we hate One problem: The companies’ and buyers’ incentives aren’t aligned. An IPO has two main purposes: raising money and giving early backers a big payday. That requires a high price – too high, usually, to be priced well for buyers. Even when the price does pop, by the time retail investors can buy, the new stock has typically changed hands several times, eating up much of your potential gain. The early birds got the worm. No stock bubble That IPOs over-price is actually good news for investors now. It is abnormal, relative to history, to have so many huge companies that haven’t "IPOed" yet. How long have we heard Lyft, Uber and Airbnb IPO chatter? Years! That’s bullish for stocks overall. That the entire group of them in recent years didn't find fancy pricing on public markets tells you stocks weren’t overvalued. No bubble here. The presumed 2019 IPO rush isn’t reason to sell, though. Yes, IPOs often frenzy near market peaks. But when quality firms with strong sales and business plans first start going public in numbers, it signals a healthy latter-stage bull market. The dangerous time is when investment bankers are pushing slop with scant sales or hopes of ready profits. The 1990s demonstrated this. A new way to avoid robocalls:Verizon adds free 'Call Filter' feature in bid to fight robocalls How to save $360 bucks:How to cut the cord and save around $360 a year According to Ritter, IPO issuance peaked in 1996, with 677 new offerings. By 2000, when stocks peaked, there were only 380 IPOs. The difference? Those mid-1990s IPOs were higher-quality firms, overall and on average. The few big successes among them drove a mania for more IPOs, leading to the late-decade slop crop, when new issues blew their cash more often than Austin Powers said, “Groovy baby.” Today’s impending IPOs aren’t so scary, with positive cash flows and long-term business plans. Moreover, investors aren’t blinded by euphoria. There is more than abundant skepticism now – about everything. But instead of gambling on IPOs, just own stocks. Benefit from the bull market that inspires IPOs. Be an investor, not a speculator. Ken Fisher is founder and executive chairman of Fisher Investments, author of 11 books, four of which were New York Times bestsellers, and is No. 200 on the Forbes 400 list of richest Americans. Follow him on Twitter: @KennethLFisher The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY.<doc-sep>
It’s getting bare-knuckled out there again in the ride-hailing wars. According to a report earlier today from The Information, newly public Lyft threatened Morgan Stanley with legal action earlier this week, demanding in a letter that the powerful investment bank stop marketing a short-selling product that it believed was disrupting trading in its stock. The outlet says Lyft learned about the product through the New York Post, which reported in its own, separate story early this week that Morgan Stanley — the lead underwriter for Uber’s IPO — had been calling pre-IPO investors in Lyft’s offering and pitching them on a way to lock in gains, regardless of Lyft’s lockup agreements with those investors. At first glance, it seems like the kind of dirty pool we’ve grown accustomed to seeing between the rival companies and their associates. But Morgan Stanley spokesman Mark Lake tells TechCrunch that the New York Post report was flat-out wrong, providing us with the following statement: “Morgan Stanley did not market or execute, directly or indirectly, a sale, short sale, hedge, swap, or transfer of risk or value associated with Lyft’s stock for any Lyft shareholder identified by the company or otherwise known to us to be the subject of a Lyft lock-up agreement. “Our firm’s activities have been in the normal course of market making, and any suggestion that Morgan Stanley engaged in an effort to apply short pressure to Lyft is false.” What went wrong is hard to know, given that the Post shielded its sources. But it was descriptive in how it characterized the purported short-selling scheme. From its story: Driving the unusual bets is language in Lyft’s lock-up agreements that has hedge funds and other early Lyft investors giving themselves a green light to make limited “short” bets, which make money on a stock’s decline. The goal is to position the bets in such a way that investors don’t benefit from a decline or a rise in the stock, but simply to lock in their IPO gains, which were significant. “If I can lock in $70 now, I’m going to do that,” said an investor. “Lyft made a mistake,” one investor who bought into Lyft shares prior to the IPO told The Post. “People who own the stock are allowed to hedge their positions. You are not allowed to reduce your economic interest.” The investor was referring to a recent e-mail Lyft sent to investors reminding them that they are not allowed to engage in any transactions that might affect a holder’s “economic interest ” in the stock. This — and other “lock-up” language around the IPO — has Lyft investors protecting against a decline in an amount identical to their stock holdings, rather than betting on the stock’s decline. We’ve reached out to Lyft for comment, which has yet to respond. A source familiar with the situation confirms that Lyft’s ire with Morgan Stanley rests entirely on that Post piece, as noted in The Information. We’re told that no further action has been taken, beyond the letter sent to the bank by Lyft’s attorneys. Whether the story ends here remains to be seen. The Information has updated its original post to include part of Morgan Stanley’s statement of denial, but it continues to report that, according to one of its sources, Morgan Stanley had been calling early Lyft investors for weeks during its roadshow and pitching them on a short-selling transaction that would enable them to lock in gains, regardless of the lockup. Assuming Morgan Stanley is telling the truth — and we can’t imagine the bank would go on the record otherwise — there’s still the question of who floated misinformation about a short-selling product in the first place. It may be one that regulators want to dig into. Stay tuned.