Lyft shares are rising on secondary markets as Uber stumbles

Key Points
  • Lyft shares are being traded on private markets for amounts "substantially" higher than earlier this year.
  • The shares are changing hands in some deals at between $25 a share and $30 a share, sources say.
  • While that's less than the $32 share value in the company's latest funding round, the discount has narrowed.
Mike Coppola | Getty Images

Uber's unrelenting problems have provided a boost to rival Lyft with investors as well as customers.

Lyft shares are among those most in demand right now among wealthy investors looking to buy into tech startups via private markets, according to three people whose firms buy such shares for themselves or others.

"Lyft has had a lot of interest since their last funding round," says Ken Sawyer, founder and managing director of Saints Capital, a San Francisco firm that buys shares mostly from early-stage venture capital firms looking to cash out of investments made years earlier.

While Saints has not purchased any Lyft shares, the "ask" on private exchanges -- or what early investors or employees say they are willing to sell their shares for -- "has gone up substantially" since the company's last funding round, says Sawyer, who says his firm has purchased $1.2 billion worth of private shares over the last decade.

Jaguar Land Rover invests $25M in Lyft

Lyft shares are changing hands in some private deals in a range between $25 a share and $30 a share, according to another source who has arranged sales of Lyft shares this year and asked to remain anonymous to protect relationships with clients.

While that's less than the $32 a share value in Lyft's latest funding round, the discount has narrowed since the start of this year, this person said, echoing comments from Sawyer.

Because of a lack of transparency in private markets, prices can vary widely, with more being paid for preferred stock than for common shares.

That trend could help keep Lyft employees happy and motivated as the company looks to close its market share gap with Uber, the ride leader that's now back on its heels.

Thanks to a fresh injection of cash, Lyft has been adding new features and expanding into new markets with the money.

Lyft earlier this year raised $600 million at a valuation of $7.5 billion from investors that included KKR, the storied private equity giant, pushing its valuation up by more than a third from $5.5 billion a year earlier.

As a result, insiders wanting to sell are finding buyers willing to pay more.

Also gaining market share

The troubles at Uber have also helped Lyft's position with riders.

A report earlier this week, based on figures from the market research firm TXN Solutions, said Lyft's share of the market has risen to just under 25 percent, and one source close to the company says it's closer to 30 percent.

Uber has lost dozens of executives this year in the wake of a series of probes into a workplace culture rife with sexual discrimination, bullying and other illegal behavior.

This week, CEO Travis Kalanick announced he would take a leave of absence to mourn the recent death of his mother, at the same time as an outside law firm presented recommendations on how to fix problems with human resources, hiring practices and other problematic aspects of company culture. Kalanick's former No. 2 executive, Emil Michael, left the company this week as well.

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