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Stock market investors have tried to unburden themselves while they could.
Lyft began trading today as a public company. He lost $ 911 million last year. Investors subsidized each trip. Apart from spending the money that his investors gave him, Lyft does not seem to have a sustainable business model. To reduce the burn rate, he reduced the wages of his drivers. And hundreds of these drivers protested and went on strike today in Los Angeles, San Diego and San Francisco to draw attention to their paychecks.
Thursday, Lyft set the IPO stock price at $ 72 and sold 32.5 million shares at this price to investors, which yielded them about $ 2.3 billion in new money. Lyft now has more money than she can burn.
But this morning, it took hours to line everything up. Transactions on Lyft shares were finally opened a few minutes before noon, because it was the time needed to manipulate the levers to create this "pop" at the beginning that would make the headlines a few minutes after the "pop" .
And of course, a few minutes later, titles like "Lyft explodes at 20% during its commercial debut …" began to make their way. That's all that really mattered. And that's all we remembered.
This "pop" is the amount that the shares have opened against the already overpriced offer price of $ 72 the stock, set Thursday. For example, today's opening price of $ 87.24 was a good 21% pop for stock market investors if they could have come out at that price. And some could.
This company gave Lyft a market capitalization of about $ 30 billion for just a minute, just before noon, so to speak. And it was as far as the hype managed to drive those shares. And then the sale by these IPO investors started. It was ruthless – despite the hype among retail investors, to get down to the ground floor of the next miracle. Four hours later, the shares closed at $ 78.29, down 10.3% from the first transaction. The sale is accelerated at the end of the day (share price data via YCharts):
It is impossible to predict how this crazy action will behave in a world where making money is uneconomic for these companies and where spending huge amounts of cash year after year for investors is a perfectly noble business model, even for companies that have existed for many years. have thousands of employees and billions of revenue.
And these business models that consume money are rewarded with ridiculously huge valuations that have been surgically removed from reality. Each of these companies offers its own internal measures that it asks badysts to monitor regularly, in order to deflect attention from unimportant details such as "net losses". And as long as these homemade measurements indicate an upward trend, whatever the method adopted. a lot of money lost by the company, it is a success raging in the eyes of these badysts. Historically, it works until it does not happen.
The financial world has gone crazy. Read … How can a company with a $ 1.8 billion business turnover lose $ 1.9 billion? WeWork shows how
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