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Lyft shares debut on Wall Street

Here's how Lyft became the 'friendly' rideshare app

What we're covering here today

  • 🔔 Lyft, America’s second biggest ride-hailing service, went public on the Nasdaq today. Click here to follow Lyft’s real-time trading.
  • The company priced its IPO at $72 a share on Thursday, valuing it at around $24 billion.
  • Why this matters: Lyft’s debut could be a bellwether for how other on-demand startups will be received by public investors in the months to come. And it will almost certainly be seen as a proxy for what to expect from its chief rival, Uber.
  • We’re also watching the broader markets and Brexit today. But Lyft is the big story.
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Stocks close higher, capping off a strong quarter

The Dow climbed 211 points Friday, or 0.8%, as Wall Street finished the quarter strong. The S&P 500 and Nasdaq both rose about 0.7%.

Shares of Lyft (LYFT), which debuted on the Nasdaq during Friday trading, rose 8.7%. They at one point jumped more than 20%.

After a tough end to 2018, the S&P 500 finished the first quarter 13% higher. It was the index’s strongest quarter since the third quarter of 2009.

Lyft rises 8.7% on its first day of trading

After initially popping more than 20% in its Wall Street debut, Lyft (LYFT) shares fizzled somewhat as the day went on. Lyft ended its first day of trading up less than 10%.

Lyft priced its initial public offering at $72 a share on Thursday, valuing the company at around $24 billion. The amount was above its original proposed price range of $62 to $68 a share.

Lyft shares pop, but analysts warn about profits, Uber and the self-driving wave

Lyft (LYFT) saw plenty of investor appetite for its Wall Street debut on Friday, but that doesn’t mean there aren’t reasons to be concerned. Here’s what some analysts are saying about Lyft’s IPO:

Daniel Ives with Wedbush: “While the Street is very excited for the opportunity tomorrow to take part in the massive growth out of the ridesharing industry there are also a number of risks/uncertainty in our opinion for Lyft including: competitive pressures from leader Uber as well as rising competitive forces, lack of a path to profitability in the near-term, regulatory uncertainty, and positioning within the next generation autonomous driving arms race.”

Morningstar Equity Research: “From a strategic standpoint, Lyft is well on its way to becoming a one-stop shop for on-demand transportation. … In contrast to Uber, Lyft is not focused on food transportation or logistics. We like Lyft’s relatively narrower focus on consumer transportation but still note that Uber has an edge on Lyft in terms of an earlier start, higher market share, and a stronger network effect around its service.”

Some Lyft drivers are surprised to hear about the Lyft IPO

I took two Lyfts to and from the Lyft (LYFT) headquarters in San Francisco today. Neither of my drivers were aware the company had begun trading just 30 minutes earlier.

In defense of my second driver, she knew an IPO was coming but wasn’t sure about the timing.

When I arrived at its headquarters, I expected to see swarms of employees wearing hot pink shirts to celebrate the company’s big day. (I saw some tweets about this on Twitter).

But instead, I saw one woman walking her dog in a hot pink shirt and another nearby in a gray Lyft shirt. The former told me there were more people outside earlier.

But compared to the pink confetti-filled scene in LA, the vibe in San Francisco was certainly more muted.

Lyft employees could buy every house on the market in San Francisco with their IPO cash

Here’s one way for Lyft employees to celebrate the company’s IPO: They could go out and buy some pricey Bay Area homes. A lot of them.

In fact, online real estate brokerage firm Redfin estimates that the shares and stock options held by Lyft (LYFT) employees are now worth a total of $1.3 billion. That’s enough to buy all 624 houses in the city of San Francisco currently on the market and still have $300 million left over.

(Maybe the new Lyft millionaires could all buy season tickets for the Golden State Warriors too? Or sign Warriors stars Kevin Durant, Klay Thompson and Draymond Green to contract extensions?)

Redfin (RDFN) CEO Glenn Kelman told CNN Business he does not expect Lyft employees to go on a property buying binge right away. But he noted that housing prices in the Bay Area were stronger than he expected after the Facebook (FB) and Twitter (TWTR) IPOs.

And even though there are reports that housing prices for parts of the Bay Area are starting to dip, Kelman said home values in San Francisco are still “breaking the law of physics.”

What’s next for Lyft and its drivers?

Lyft, like Uber, built its business on the backs of drivers. But what happens to drivers and their concerns, from pay to worker rights, once the companies start feeling pressures from Wall Street to make money?

Drivers and analysts tell CNN Business they aren’t so sure things will improve, but the companies would be smart to try.

As a token of goodwill to drivers, Lyft granted cash bonuses to drivers who meet certain ride thresholds – $1,000 for 10,000 trips or $10,000 for 20,000 trips – ahead of the IPO that they could opt to put toward stock.

San Francisco-based Lyft driver Jay Cradeur, who is eligible for the smaller of the bonuses, said drivers who were eligible for the bonus program were given a deadline to purchase shares on Thursday evening once the final pricing was set. Once his shares hit $100, he plans to sell.

NYU professor Arun Sundararajan says driver happiness is important to building long-term brand affinity.

“The driver is the face of the brand,” he said. “The entire experience is controlled by the person whose car you get into – if they’re projecting, ‘I’m underpaid and unhappy,’ that’s not going to be a good experience.”

Lyft jumps more than 20% in Wall Street debut

Lyft began trading at $87.24 a share on the Nasdaq Friday morning, a more than 20% increase over its IPO price. The strong Wall Street debut could be an encouraging sign for the long list of billion-dollar tech startups expected to go public later this year, including Uber.

Lyft priced its initial public offering at $72 a share on Thursday, valuing the company at around $24 billion. The amount was above its original proposed price range of $62 to $68 a share.

And the ticker symbol? LYFT

US stocks hold gains amid Lyft IPO and Brexit turmoil

US equities held morning gains through midday trading as Lyft made its public markets debut. The ride sharing company’s stock is up 19%.

  • The S&P 500 edged up 0.5%.
  • The Dow jumped nearly 150 points, or 0.6%, while the Nasdaq climbed 0.7%.

Stocks appeared to shake off another bout of Brexit uncertainty after parliament rejected for a third time Prime Minister Theresa May’s EU divorce deal.

  • The pound fell sharply against the US dollar before recovering slightly.

British pound falls after May’s plan defeated for third time

The British pound fell as much as 0.5% against the US dollar after parliament rejected for a third time the EU divorce deal negotiated by Prime Minister Theresa May.

The pound had been trading flat ahead of the vote, but it slipped below $1.30 after the measure was defeated by a margin of 58 votes.

The vote suggests the only Brexit deal negotiated with the European Union is now dead, leaving two ways forward: A ‘no-deal’ Brexit on April 12 that could do serious harm to the UK economy, or a lengthy delay to Brexit while Britain figures out what it does next.

Lyft talks up new city investments

Lyft announced a program to invest in cities during its bell-ringing celebration.

The company said Lyft City Works will invest $50 million or 1% of its profits yearly — whatever is larger — in the cities it operates in.

Lyft’s first partner was fitting, Los Angeles, where CEO Logan Green grew up, and became inspired to find alternatives to car ownership.

Los Angeles will receive $5 million, which will fund rides for the staff and residents of the mayor’s housing programs, and build electric vehicle infrastructure.

Program details:

  • It’ll form advisory councils of Lyft drivers, employees and local leaders in other cities to review applications for non-profits seeking Lyft’s funding. Then it will decide how to invest.
  • The money will largely be spent on free rides for non-profits and transportation infrastructure, such as docking stations for bike and scooters. The investments should also benefit Lyft, which operates bike and scooter-sharing services nationwide.
  • The infrastructure funding will go into underserved areas. Motivate, the docked bikeshare company Lyft acquired in 2018, has been criticized previously for not serving low-income areas.

Wall Street drives higher ahead of Lyft IPO

Wall Street is riding high as Lyft prepares to make its debut in the public markets.

The Dowjumped 100 points, or 0.4%, on Friday morning. The S&P 500 advanced 0.5%, while the Nasdaq climbed 0.6%.

Friday is the final day of what’s been a fantastic first quarter for stock investors. The S&P 500 has surged 13%, leaving the index on track for its strongest quarter since 2009.

Lyft is scheduled to debut on the Nasdaq under the ticker symbol “LYFT” on Friday morning. Boosted by strong demand, Lyft priced its IPO at $72 a share, valuing the ride sharing company at about $24 billion.

BlackBerry (BBRY) jumped 13% after the company’s earnings and revenue topped expectations.

Wells Fargo’s (WFC) post-Tim Sloan bump proved fleeting. After opening more than 1% higher, Wells Fargo turned negative and then fell almost 2%. Sloan, who announced his sudden departure late Thursday, will be replaced by an outsider.

Lyft co-founders ring opening bell in LA

In an unusual move, the Lyft co-founders rang the opening bell for their big Wall Street debut thousands of miles away in Los Angeles rather than at the Nasdaq.

Logan Green and John Zimmer, along with others from the Lyft team, cheered and clapped at the market open as pink confetti fell from the ceiling.

Green and Zimmer are holding a media event Friday in a converted warehouse in Los Angeles, where Lyft is committing funds each year to support transportation initiatives in cities, starting with Los Angeles.

Lyft IPO will lift the fortunes of its co-founders

This should be a happy day for Lyft CEO Logan Green. Green, one of Lyft’s co-founders, owns a big chunk of Lyft (LYFT) stock. At the IPO price of $72, his stake is valued at a little more than $600 million.

Fellow co-founder John Zimmer, who is Lyft’s president, owns a stake worth about $416 million. Green and Zimmer aren’t the biggest shareholders – but they control nearly 50% of the shares with super-voting rights.

Other investors that will cash in when Lyft starts trading? Japanese e-commerce giant Rakuten, General Motors (GM), Fidelity, VC firm Andreessen Horowitz and Google owner Alphabet (GOOGL).

Kicking off a Wall Street debut from ... a converted warehouse in Los Angeles

Lyft’s co-founders kicked off their Wall Street debut in an unusual location: a converted warehouse in Los Angeles, thousands of miles from the Nasdaq, where their company is set to begin trading later this morning.

Logan Green and John Zimmer joined a procession of other execs and the city’s mayor, Eric Garcetti, for a press event to announce a new pledge. The company plans to invest $50 million or 1% of its profits, whichever is greater, each year to support transportation initiatives in cities, starting with Los Angeles.

“When we ring the bell today, we are not just ringing the bell on a celebration of a unicorn ride-share company,” Garcetti said at the event. “We are celebrating a new standard for public private partnerships.” 

Zimmer said:

H&M shares rocket higher on signs of a turnaround

Shares in H&M advanced 13% in Stockholm after the apparel retailer said it was selling fewer items at a discount, a sign that shoppers are responding to a turnaround strategy that was put in place after a series of dismal quarters.

The Swedish retailer said that profits in the three months ended February dropped to 1.04 billion Swedish kronor ($112 million), but that was better than analysts had expected. The company said it was gaining share in key markets and selling more products online.

H&M has struggled to keep pace with rivals that were quicker to recognize the need for building a major online sales presence. Its stock has dropped by a third over the past two years.

Lyft's IPO, by the numbers

Lyft is set to make its Wall Street debut on Friday, making it one of the largest tech companies to go public in the last decade. Here are the key numbers to keep in mind as Lyft begins to trade:

  • Lyft posted a $911 million net loss in 2018, more than any other US startup has lost in the year prior to its IPO.
  • But revenue doubled to $2.2 billion in 2018 from the year prior.
  • The company had 18.6 million active riders in the final three months of 2018 and 1.1 million drivers.
  • Lyft’s revenue per rider in the fourth quarter: $36.04.
  • The company’s two co-founders will have nearly 49% of the voting power over the company after it goes public.

Perks on perks for Lyft drivers

As much as it’s grown, Lyft is still looking for new ways to lure drivers to its platform.

The company said this week that it will open its own repair shops nationwide, offering deep discounts on things like flat tire fixes, brake work and oil changes, and provide free bank accounts in a bid to attract and retain drivers.

Lyft announced the perks on Tuesday, before its IPO.

The San Francisco-based tech company, which lost $911 million in 2018, must convince investors it can turn a profit.

Opening auto service centers and offering bank accounts are added costs for Lyft, which will sacrifice its profit margin for the centers to give drivers better deals, according to COO Jon McNeil.

But the new programs aim to improve driver satisfaction and retention, which would help Lyft’s bottom line.

How Lyft got to this point

We all know Lyft for its fuzzy pink mustaches and reputation for its relatively “friendly” drivers.

But did you know that back in 2007, the company was called Zimride? The idea first came from co-founder Logan Green, who started off wanting to offer long-distance ride-sharing between college campuses. 

Here’s an interactive look at how the business took off — and gained ground to become a $24 billion transportation giant.

Lyft's president looks back on the company's tough times

Right now, Lyft is thriving. The company employs thousands of workers. It’s expanded from ride-hailing into bikes, scooters and self-driving cars. And today, it’s going public.

But things were different in 2014.

At the time, Uber had raised over a billion dollars, giving it 10 times the capital Lyft had. And critics wondered if Lyft, which only had a few hundred employees, would even survive. 

“I was in a funk for several months,” Lyft co-founder John Zimmer told CNN’s Laurie Segall in an interview last last year, reflecting on the series of challenges facing the company back then.

Meet the 'cutthroat missionaries' who run Lyft

Logan Green and John Zimmer, the co-founders of Lyft, are often described as the “nice guys” of the ride-hailing industry. They built a friendly brand synonymous with furry pink mustaches and fist bumping drivers. But the founders are also fierce competitors.

“We’re like cutthroat missionaries,” Green told CNN Business last year. “I think people see the missionary aspect, or see that we care about taking care of people, and assume it means we’ll be soft when it comes to competing.”

Lyft’s IPO this week is proof of that. Despite Uber’s attempts to outmaneuver its rivals through aggressive fundraising and dirty tricks, Lyft ended up beating it in the race to go public.

A partial list of unicorns that totally might possibly go public this year, maybe

Lyft is just the first in a stampede of unicorns that might finally make their way to Wall Street this year. Here are a few other billion-dollar startups that have either filed to go public or talked an awful lot like they may file to go public soon.

  • Uber’s CEO has repeatedly said the Lyft rival plans to go public this year.
  • Pinterest, a visual discovery platform, filed to go public last week.
  • Slack, a workplace messaging service, confidentially filed to go public.
  • Postmates, a food delivery service, confidentially filed to go public last month.
  • One of Airbnb’s founders said last year that the company would “be ready to IPO” in 2019. More recently, another Airbnb co-founder said it might not go public in 2019.
  • Casper, an online mattress company, is rumored to be seeking to hire underwriters for a public offering.
  • Palantir, a secretive data crunching firm founded by investor Peter Thiel, is reportedly looking to go public later this year.