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Illustration: Lazaro Gamio/Axios

Lyft last Friday was hit with a class action lawsuit by investors in its IPO, who have seen the value of their shares fall precipitously.

My thought bubble: Normally I ignore such cash grabs, as they reek of sour grapes. But this one, with or without merit, highlights a reason why both Lyft and Uber have struggled since going public.

The plaintiffs argue that Lyft hid the ball in several respects:

  1. Failure to disclose that its bike-share program was about to pull 1,000 electric vehicles in New York City over safety concerns. (Unclear that it's material, given that NYC is just one market and the e-bikes were replaced with pedal bikes).
  2. Failure to disclose an increase in surge pricing ahead of the IPO, thus allegedly disincentivizing drivers. (This flies in the face of Lyft's escalating price war with Uber and, even if true, it's not clear how it disincentivized drivers).
  3. Possibility of labor disruptions. (Seriously? You didn't know this? Google much?)
  4. Claiming a 39% market share for North American ride-hail, which the plaintiffs call impossible because Uber allegedly claimed a 65% share.

This last argument about market share discrepancy might just be the result of Uber filing its IPO papers several months after Lyft (i.e., numbers move over time), but it goes to a broader lack of granular transparency by both companies.

For example, we don't know:

  • The exact number of rides by market, broadly or narrowly defined.
  • Per ride revenue, for either the company or the drivers.
  • Number or percentage of discounted rides.

Retailers provide same-store sale data so that investors can better judge the delta between legacy and expansion, but Lyft and Uber don't do anything similar. And when it comes to deeper unit economics, investors are largely left to their own devices, or to trusting amorphous statements about being contribution positive in unspecified large markets.

  • Again, none of this is to validate or invalidate the lawsuit. It's simply to say that it, in part, illustrates a core opacity that I'm told has made some investors stay away, particularly in light of "peak loss" promises.
  • A Lyft spokesman had no comment on the suit.

The bottom line: This is still relatively early days for both companies, and their public fortunes are nowhere near sealed. But when it comes to disclosure, they may need to speed up their maturity.

Go deeper

1 hour ago - Health

WHO: Not yet known whether Omicron leads to more severe disease

Photo illustration: Pavlo Gonchar/SOPA Images/LightRocket via Getty Images

The World Health Organization on Sunday said that it is not yet clear whether the newly discovered Omicron variant is more transmissible than other strains of the COVID-19 virus.

Why it matters: The agency's statement comes as the variant, discovered in South Africa, has already been detected in European and Asian countries.

7 hours ago - Health

Fauci: Omicron variant will "inevitably" be found in U.S.

Photo: Chip Somodevilla/Getty Images

Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, cautioned on Sunday that the COVID-19 Omicron variant will "inevitably" be found in the United States.

Driving the news: Fauci, Biden's chief medical adviser, told ABC's George Stephanopoulos on "This Week" that U.S. officials will meet with colleagues from South Africa later on Sunday to try to determine the severity of the cases, as countries scramble to learn more about the variant.

Updated 9 hours ago - Politics & Policy

Dems fear supply-chain blame

Illustration: Aïda Amer/Axios

As supply-chain kinks drive up prices and disrupt holiday shopping, Democrats are scrambling to show action and deflect blame.

Why it matters: With their party controlling both the White House and Capitol, vulnerable Democrats worry supply-chain snafus will hurt them in next year's midterms.