- Company Name
- Lyft Inc.
- Stock Symbol
- Class Period
- Purchasers of Lyft common stock pursuant to the Company’s March 29, 2019 initial public offering
- Motion Deadline
- July 16, 2019
- Northern District of California
The complaint charges Lyft, certain of its officers and directors and the underwriters of its March 29, 2019 initial public offering (“IPO”) with violations of the Securities Act of 1933. Lyft operates a peer-to-peer marketplace for on-demand ridesharing, including access to motor vehicles and shared bikes and scooters.
In November 2018, Lyft acquired Bikeshare Holdings LLC’s technology and corporate functions (“Motivate”) for $251 million. In 2017, Motivate was the largest bikeshare operator in North America, with revenue of approximately $100 million, which operated New York City’s Citi Bike system along with bike sharing programs in several other cities, including in the San Francisco Bay area, Chicago, Boston, and Washington D.C. According to Lyft’s Form S-1 Registration Statement filed in connection with the IPO (“Registration Statement”), Lyft acquired Motivate to “establish a solid foothold in the bikeshare market and offer access to new transportation options on the Lyft Platform.”
On March 28, 2019, Lyft offered 32.5 million shares of Lyft stock (not including the underwriters’ overallotment) to the public at $72.00 per share for gross proceeds of $2.34 billion. According to the Registration Statement, Lyft estimated that its ridesharing marketplace was “available to over 95% of the U.S. population, as well as in select cities in Canada,” and that its “U.S. ridesharing market share was 39% in December 2018, up from 22% in December 2016.” Lyft's focus on its market share gain and position were key selling points to IPO investors.
The complaint alleges, however, that the representations in the Registration Statement were materially inaccurate, misleading, and/or incomplete because they failed to disclose, among other things, that Lyft's claimed ridesharing position was overstated; that more than 1,000 of the bicycles in Lyft's rideshare program suffered from safety issues that would lead to their recall; that Lyft’s drivers were becoming disincentivized from driving for Lyft; and that Lyft had failed to warn investors that a labor disruption could affect its operations. As a result of these materially misleading representations in the Registration Statement, the price of Lyft shares was artificially and materially inflated at the time of the IPO.
Soon after the IPO, Lyft’s stock price began to decline as investors raised concerns that Lyft’s market share may have been overstated – concerns that were exacerbated by Uber, a much larger ridesharing company that was preparing to file for an initial public offering. On April 11, 2019, Uber filed its Form S-1 Registration Statement with the SEC in connection with its planned offering. The Form S-1 claimed that Uber’s market share was greater than 65% in the United States, undermining Lyft’s 39% market share claim. Then on April 15, 2019, the New York Times reported that Citi Bike was taking 1,000 bikes out of service in New York and more in Washington D.C. and San Francisco due to dozens of reported injuries and safety concerns. In response to these disclosures, the price of Lyft stock fell to less than $57 per share. As more adverse facts regarding Lyft’s business continued to emerge, including that Lyft drivers were planning to go on strike, the price of Lyft stock fell to below $55 per share.