It’s worth reminding ourselves that a significant rise in corporate value after an initial public offering is a failure of that IPO. Yes, that’s not normally how everyone thinks of it, certainly not the newspaper finance pages. Yet it is still so. If Lyft was sold at $21 billion – sure, not the whole company but – and a day later is worth $30 billion then that’s a failure. Because, obviously enough, the people selling stock were doing so in order to gain money for having done so. Getting less money than they could have done is thus a failure of pricing:
Lyft valued at $30bn as shares jump 21pc in blockbuster tech IPO
They got, in one reading, 21% less for the shares they sold than they could have had. This is a failure:
Shares in Lyft soared on Friday as Silicon Valley’s first major flotation of the year demonstrated red-hot investor demand for a new wave of technology listings. The taxi-hailing app company was valued at as much as $30bn (£23bn) as shares rose 21pc on its market debut. The success of the initial public offering (IPO) is set to open the floodgates for companies including Uber, Pinterest, Airbnb and Slack to test investor appetite in the coming months with an unprecedented series of major listings.
We could say that’s a success for the buyers. We could say that’s a success for the system, as it encourages buyers of the next few. But it’s a failure of this one and specific IPO. The very fact that Lyft stock rose sharply in price immediately after the IPO is a failure of that IPO.