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

Biden: The next president should decide on Ginsburg’s replacement

Joe Biden. Photo: Drew Angerer / Getty Images

Joe Biden is calling for the winner of November's presidential election to select Ruth Bader Ginsburg's replacement on the Supreme Court.

What he's saying: "[L]et me be clear: The voters should pick the president and the president should pick the justice for the Senate to consider," Biden said. "This was the position the Republican Senate took in 2016 when there were almost 10 months to go before the election. That's the position the United States Senate must take today, and the election's only 46 days off.

Trump, McConnell to move fast to replace Ginsburg

Photo: Alex Wong/Getty Images

President Trump will move within days to nominate his third Supreme Court justice in just three-plus short years — and shape the court for literally decades to come, top Republican sources tell Axios.

Driving the news: Senate Majority Leader Mitch McConnell and Senate Republicans are ready to move to confirm Trump's nominee before Election Day, just 46 days away, setting up one of the most consequential periods of our lifetimes, the sources say.

Updated 5 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 10 p.m. ET: 30,393,591 — Total deaths: 950,344— Total recoveries: 20,679,272Map.
  2. U.S.: Total confirmed cases as of 10 p.m. ET: 6,722,699 — Total deaths: 198,484 — Total recoveries: 2,556,465 — Total tests: 92,163,649Map.
  3. Politics: In reversal, CDC again recommends coronavirus testing for asymptomatic people.
  4. Health: Massive USPS face mask operation called off The risks of moving too fast on a vaccine.
  5. Business: Unemployment drop-off reverses course 1 million mortgage-holders fall through safety netHow the pandemic has deepened Boeing's 737 MAX crunch.
  6. Education: At least 42% of school employees are vulnerable.