On Lyft’s long-awaited first day of public trading, share prices rose 21% before closing the day up 8.7%.
But as Lyft’s leaders sipped champagne, its drivers were on strike and its newest investors were already losing money. Despite investor optimism, Lyft (like Uber) still doesn’t make a profit (they lost $911m last year) or pay drivers a living wage.
Profits or no profits, people are throwing cash at Lyft
Lyft went public at a price of $72 per share (far higher than its initial range), and share prices rose as high as $87/share before ending the day at $78/share.
Lyft somehow generated 20x more interest than it had shares to sell, meaning investors wanted to sink $47B into a company whose IPO prospectus reads: “We may not be able to achieve or maintain profitability in the future.”
Everyone who got a Lyft was already on top
After raising $2.34B, Lyft hit a valuation of $26.4B (still only ¼ the projected size of Uber).
Early Lyft employees earned so much in shares and stock ($1.3B) they could buy every one of the 624 houses on the market in San Francisco and still have $300m left for housewarming parties.
Early institutional investors like Founder’s Fund, Andreessen Horowitz, and Google also made billions, but average-Joe investors who bought at the IPO’s oversubscribed opening lost 11% on day 1.
One big group wasn’t excited about Lyft’s IPO: its drivers
In Los Angeles, San Francisco, and San Diego, Lyft drivers — who often make just $10 per hour, less than California’s minimum wage — protested the misleading tactics Lyft uses to keep low-paid drivers at the wheel.
This IPO was no exception: Lyft offered its drivers IPO stock, but only in exchange for 20k rides — AKA never missing a day of work and completing 15.4 rides a day for 5 whole years (so much for that “flexible schedule” hype).
Now that Lyft is public, pressure to cut costs will increase, which could lead to even lower earnings for drivers down the road.