A recent article published by Reuters reports that Lyft Inc has reached a $25,000,000 settlement to resolve claims by shareholders that the company concealed safety problems, including sexual assaults by drivers, before its initial public offering in 2019. Filed on Thursday, June 16, 2022, the preliminary all-cash settlement requires approval by U.S. District Judge Haywood Gilliam Jr. Despite agreeing to the settlement, Lyft denied any wrongdoing.
The first ride-hailing company to go public, Lyft raised $2.34 billion in its IPO. The San Francisco-based company was its share price fall below the IPO price of $72 per share less than two weeks after trading began on March 29, 2019. The shares have yet to recover to their IPO price.
By failing to disclose know problems in its IPO registration statement, shareholders accused Lyft of attempting to give the impression that it was more socially responsible than their main rival Uber Technologies. As these internally known safety issues came to light, the share price fell as a result. In the months after the IPO, shareholders claimed that dozens of victims brought claims against Lyft related to driver sexual misconduct. The brand therefore caused an “existential risk” to the company by not disclosing these problems.
Shareholders also accused Lyft of concealing braking issues that plagued its bike-share program. These safety problems surfaced in April 2019, when the company’s electric bike fleet exited the Washington D.C., San Francisco, and Washington markets. Lyft is also accused of concealing its dependence on promotions to boost the company’s market share. Shareholders claim that the resulting price war resulted in Uber recovering its lost market share.
Lyft shares continue to fall. As of June 17, 2022, shares have lost approximately 80% of their IPO price.