Valenti Hanley PLLC

Lyft investors file class-action suit shortly after its IPO

Initial public offerings (IPOs) can be tricky things. Calculating the value of a stock before it becomes available to the public for purchase isn't an exact science. Uber's IPO earlier this month was widely considered to be a "flop" as it quickly dropped below its IPO price -- although it has since rebounded somewhat.

Uber's chief ride-hailing rival Lyft went public earlier this spring with similarly disappointing results for investors. Some of these investors, however, are taking legal action against the company. In a class-action lawsuit, they're claiming that the company made misleading statements and overstated its market share during its IPO.

Lyft shares were valued at $72.00 this March when they were first made available to investors. However, they've since dropped by almost $20 a share. According to the law firm that represents the plaintiffs in the case, the company made false and misleading public statements around its IPO. One of the issues involved its ride-share bicycles. Over 1,000 of them have been recalled due to safety issues.

Many people would say that investing in the stock market is a gamble, and investors can never predict what will happen. While there's some truth to that, companies owe both current and prospective investors complete and accurate information about their health. This includes information that could impact the value of their stock in the future.

When investors believe that they've been given false or incomplete information and have lost money as a result, they may have the option of taking the company to court to recover their losses. If you believe that you have such a case, it's wise to talk with an attorney who represents investors in legal matters.

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