Lyft Analyst Sees ‘Almost Nothing’ in Filing to Assess Business

(Bloomberg) -- Lyft Inc.’s IPO filing omits details necessary for investors and analysts to create a financial model of the company, according to an analyst who specializes in tech listings.

Nine days away from its Nasdaq debut, Lyft’s executives are in Boston on Wednesday as part of a nationwide pitch to potential investors for its initial public offering. The share sale could raise up to $2.4 billion at a valuation north of $20 billion for the second-largest ride-hailing company. But buyers will need to fill in some blanks for themselves, said Rett Wallace, CEO of Triton Research Inc.

Lyft Analyst Sees ‘Almost Nothing’ in Filing to Assess Business

“It’s never good when companies decide to not be straightforward about the math of their business, and these guys told us almost nothing you need to build a model,” he said in a phone interview.

Citing Netflix Inc. and Spotify Technology SA as examples of more transparent firms, Wallace said Lyft “had an opportunity to be forthcoming” in its metrics, such as separating the acquisition costs of drivers versus passengers, disclosing churn rates or breaking out scooters and bikes.

Detailed numbers

One reason Triton is bearish about Lyft’s missing metrics is the management compensation structure, which is based on two triggers -- a sale or IPO.

“I would suspect, given the incentive structure, that Lyft had many, many M&A conversations with buyers that would have been able to see the detailed numbers,” Wallace said. “One could speculate that the lack of success in those conversations might have impacted the company’s willingness to disclose more detailed numbers to its backup buyers in the public market.”

Triton, whose research focuses on upcoming technology IPOs, scores Lyft below its average for other listings in the sector. Initial public offerings since January 2018 with similar Triton scores underperformed through March 1, according to the firm’s data.

Not everyone is viewing the company so cautiously. Within a day of starting investor meetings, Lyft already had enough commitments to sell all 31 million shares it’s offering in the IPO. But it remains to be seen what price the investors are willing to pay.

D.A. Davidson gave Lyft its first buy rating this morning, citing impressive market share gains within the U.S. as demand for ride-sharing continues to grow. Analyst Tom White awarded a $75 price target, 15 percent above the midpoint of Lyft’s $62 to $68 IPO price range. IPOs typically price at a 10 percent to 15 percent discount to the company’s valuation.

A spokesperson for Lyft declined to comment.

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