Lyft launched the investor road show for its initial public offering on Monday (March 18), aiming to get a valuation of between $21 billion and $23 billion. With GM owning more than 18.6 million Class A shares, its investment could initially be worth $1.16 billion to $1.27 billion. Take into consideration a 180-day lock-up period where GM cannot sell — along with the impending IPO of Lyft’s chief rival Uber — and that value could go even higher.
As for Lyft’s other strategic investors, the company’s IPO paperwork explained that Japanese eCommerce company Rakuten owns 12.2 percent of the ride-hailing company, venture capital firm Andreessen Horowitz owns 5.9 percent and Alphabet owns around 5 percent.
While GM is remaining mum about its plans, some investors would like to see the money returned to shareholders through buybacks or a special dividend.
“Unless GM can leverage its investment in Lyft to accelerate its own robo-taxi ambitions with Cruise, we believe it would be appropriate to cash out its stake to repurchase its own under-valued shares,” said Michael Razewski, a partner with Douglas C. Lane & Associates, which owned about 2.6 million GM shares at the end of last year, according to Reuters.
“If I want to buy Lyft, I’ll go do it myself,” added Scott Schermerhorn, managing principal with Granite Investment Advisors, which owns more than 210,000 GM shares. “Take the proceeds and invest it in something that’s core to their business or give it back to shareholders.”
But Jacques Elmaleh, portfolio manager with Steinberg Global Asset Management, with almost 24,000 GM shares at the end of last year, noted that it is too soon for the company to cut ties with Lyft.
“I’d be inclined that they hold onto it and see how it plays out,” he said.