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One Theory Why Lyft, Uber IPOs Flopped: Special Purpose Vehicles
- SPV investors are locked up and looking for ways to hedge
- That’s fueled high levels of short selling, especially in Lyft
The New York Stock Exchange (NYSE) during Uber Inc.'s initial public offering (IPO) in New York.
Photographer: Michael Nagle/Bloomberg
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The dismal debuts of Lyft Inc. and Uber Technologies Inc. sparked hand-wringing and a search for scapegoats. One theory gaining ground centers on the high number of special purpose vehicles that invested in the twin ride-hailing giants when they were private companies.
SPVs are often set up to invest in fast-growing startups, especially those like Uber that stay private for many years. Many employees with equity want an exit and won’t wait for an initial public offering, so those vehicles are formed to buy their stock.