Confetti falls as Lyft -CEO Logan Green (C) and President John Zimmer (left C) on March 29, 2019 in Los Angeles, California, celebrate the Nasdaq opening of the company's opening bell. The shares of the Ride -Hagel -app company were initially at 72 US dollars.
Mario Tama / Getty Images
Company: Lyft Inc (Lyft)
Lift (lift) is a multimodal transport network in the USA and Canada. It offers access to a variety of transport options via its platform and mobile applications. The Lyft platform offers a marketplace where the drivers can be coordinated with drivers via the Lyft app, where they act as transport network. Transport options via its platform and mobile applications essentially consist of its passenger market, the drivers and drivers in cities in the USA and in certain cities in Canada, LyfT's network of motorcycles and scooters, and the express drive program, for the driver with the short-term rental, with the effort, with the on and running, with the lights, the LLC service, with LK services, the LK services and a third-party rental ceremony, with the inclusion of LLCs, according to a third-party share that can be used with the LK and a third party, to offer the LK services. As a result, the passenger market for companies through LYFT businesses such as The Concierge and Lyft Pass programs is available.
IPO value: USD 6.86 billion (USD 16.26 per share)
Stock Diagram -iconstock -Igram -Symbol
Lyft, 1 year
Activist: engine capital
Percentage possession: 0.81%
Average costs: N/A
Activist comment: Engine Capital is an experienced activist investor who is managed by the managing partner Arnaud Ajdler, former partner and senior managing director at Crescendo Partners. The prehistory of the engine is to send letters and/or nominate directors, but settle down pretty quickly.
What happens:
On March 25, Engine announced a position in Lyft and explained that she was calling for a strategic review, improved capital allocations and the elimination of the company's shares in the company's dual class. On April 16, the engine nominated two directors for the election to the board at the 2025 annual conference, but withdrew these nominations after a productive engagement with the company, which led to several initiatives for capital allocation, including the company, which in the upcoming quarters committed to significant shares in stock.
Behind the scenes:
Since David Risher took control as CEO from Lyft in 2023, Lyft has made a few significant improvements, optimized the company, improved platform functionality and expanded the market presence. These have led to remarkable material improvements in the company's operational and financial performance. From 2023 to 2024, sales rose by 31.39%, the EBITDA rose from $ 359.1 million to USD $ 27.3 million and Free Cashflow (FCF) from Negative $ 248.06 million to USD 766.27 million, which are the first time since its IPO. Despite these improvements, Lyft's share price dropped by 30%in the same period.
There are some factors that can help explain the current undervaluation of the company. First, the dynamic of the industry is because Lyft is in a duopol Above on the passenger market. In the United States, Uber holds around 75 percent of the market, while Lyft holds 24% with the remains of niche areas (DH on -board width, Alto and Waymo). Due to the dominance of Uber, the company is in an inherently difficult strategic position – while Lyft is only in the USA and Canada, Uber is diversified in most global markets and has expanded to other synergetic areas such as food and alcohol supply. This makes Lyft particularly susceptible to the decisions of Uber in terms of pricing and advertising actions, as the management found for the company during the recent profit. The market has felt this situation, with Lyft's shares in the last 1, 3- and 5-year periods of 37%, 287%and 210%below average. Second, Lyfts are suboptimal capital allocation practices. The company has experienced excessive dilution of equity. Lyft's outstanding shares have almost doubled since 2019. The company's series-based compensation (SBC), which is currently around $ 330 million annually, is currently caused by the company's series-based compensation (SBC).
Engine Engine, which calls for a strategic review, improved capital allocation practices and the elimination of the company's two -class stock structure. These suggestions are all worth being evaluated. First, there are some reasons why a strategic review, especially a potential strategic acquisition, makes sense. As already mentioned, one of the, if not the biggest challenge with which Lyft faces, is her inability to scale and diversify at the pace. Since the ride industry continues to grow and develops, this will only become more important for Lyft's potential long -term success. It seems the most effective way to overcome this, either sold or merged to a larger strategic unit, which Lyft can give the scale and diversification that it takes to compete with Uber. Large actors in the food or automotive industry are useful as a potential buyer. For example, DoorashWith a market capitalization of around 80 billion US dollars, Lyft could easily afford to have synergies in order to better optimize both platforms, a global presence and would create more source options for drivers. On the other hand, automatic companies test the autonomous vehicle industry with carpools Google (Waymo) and Amazon (ZOOX), which is potentially the next technological development in the passenger area, also makes sense as a buyer. In view of the depressive assessment of Lyft (EV to 2026 Konsenebitda -multiple multiplier of approximately 6.6x), the latest growth and a large number of potential synergies are certainly possible here.
Second, the company must clearly improve its capital allocation practices. While Lyft has recently announced a buyback program of 500 million US dollars, this is not even sufficient to counteract watering through the current SBC practices in the next two years. With 2 billion US dollars money (approx. 700 million US dollars net money) and the company, which increases its FCF drastically, Lyft seems to have the opportunity to bring shares back much more aggressively in order to counteract more than just SBC dilution.
Finally, as a corporate governance investor, the engine will suggest eliminating the dual class structure. This structure is originally set up to give the founders control and now seems to be unnecessary, since co -founders John Zimmer and Logan Green are no longer involved in daily operation. These preferred stocks bear 20 votes per share, which give them 30.8% of the total tuning power, while they only have about 2.3% of the outstanding shares. The elimination of the two -class stock structure is absolutely useful, is the right one and is supported by the vast majority of shareholders. However, there is practically no way to voluntarily give up this check position. As an experienced activist investor who knows Ajdler, he has to try, but also as an experienced activist investor. At least the company can refine the board to reflect the changes in the past six years since its IPO -seven of the ten current directors have no other experience in the stock company as Lyft -the board has a tendency towards directors with experience in start -up companies or an early stage. Although this background may have been valuable, Lyft is no longer a company. A refreshment of these directors for people with a public market, capital allocation and capital market expertise would better position what it is today.
After the start of a proxy fight for two board seats, this campaign closed when the engine withdrew its nominations of the director on May 8. This payment was made after the company's public announcement in order to increase the approval for the share buyback to 750 million US dollars to $ 750 million and to use such a permit in the amount of $ 200 million in the next 12 months.
Ken Squire is the founder and president of 13D monitor, an institutional research service for shareholders, and the founder and portfolio manager of the 13D Activist Fund, an investment fund that invests in an activist 13D investment.