Markets are the world's greatest mechanism for turning enormous amounts of information into a single agreed-upon valuation. Price discovery, as it's known, is one of the most important things that any market does. But it doesn't always work efficiently.
Driving the news: Lyft's S-1 was 275 pages long. After digesting all that information, the investors decided to buy: Lyft received $47 billion of orders for just $2.3 billion of shares, and the stock immediately surged to as much as $88.60 per share. It then proceeded to lose a third of that value in the space of two weeks, closing on Friday at $59.90.
My thought bubble: The SEC is doing a pretty bad job of ensuring that companies provide genuinely useful financial transparency to their investors. The limitations of a "more information is always better" approach are becoming obvious. What's really needed is a significant expansion of the agency's structured data framework, so that analysts and investors can easily download a spreadsheet where all the important information can be found and modeled.
