Back in April, The Rideshare Guy contributor Jay Cradeur was given the opportunity to purchase pre IPO stock from Lyft. It was a pretty interesting story, so even though it happened a few months ago I thought that it’s still a good story to share!
Take a look at Jay’s video below to see what he ended up doing with his stock. And if you’d like, you can read the transcript of the video below.
Would you buy Lyft stock if offered?
In today’s video, what would you do if Lyft gave you $1,000 and they gave you the option to buy pre IPO stock in their company? Well, that happened to me and in this video I’m going to break it down for you. And stick around because at the end of the video I’m going to share with you exactly what I did.
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Lyft sent me an email and they said that because I had done 10,000 rides and I was a driver in good standing, they were going to give me $1,000 and if I wanted to, I could buy stock in their company before the IPO, which was last Friday. On the one hand, I was really grateful that I got $1,000, but let’s break this offer down.
The bonus tiers cut out drivers like me
Lyft gave me this bonus of $1,000 for doing 10,000 rides, but they also had another bonus. If I did 20,000 rides, you got $10,000, 10 times the amount. Someone like me that has nearly 15,000 rides, which means I’m halfway between $1000 and $10,000 still only get a thousand.
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I’m grateful that I got $1,000, don’t get me wrong, but I wish Lyft would have done a tiered program. So that drivers who did eight thousand, nine thousand, twelve thousand, eighteen thousand, could get paid proportionally rather than…it’s either $1,000 or $10,000.
Of course it’s a brilliant PR move for Lyft. They didn’t have to pay out too much money because God knows there aren’t too many people that have 10,000, let alone 20,000, rides under their belts specifically and only for Lyft. So they got to say, Hey, a world where we’re, we’re honoring the loyalty of our drivers were given $10,000 bonuses.
Take the money and run, or buy and hold?
There aren’t many people who got it, so I’m grateful. I think it could have been done a lot more of fair to all drivers. What would you do? Invest or just take the money and run. Now most people I’ve heard of just took the money. My thought process was it’s $1,000. It wasn’t money I was expecting, so why not throw it into the market? But then I thought, well, what if Lyft tanks and my thousand dollars suddenly becomes only $500. That’s a concern.
And then I heard that there was this lockup period, which means that you get the stock but you can’t sell it for a certain amount of time. So I started to get some emails from fidelity and they said that in fact there would be a 180 day lockup period for everybody with the exception of the drivers.
Without a lockup period I could sell it right away. Maybe it’ll go up fast and stay up for a while and then drop. And then I can at least sell it when it got high. So I decided to go for it. I said, let’s do it.
Prices going up…even before IPO!
The pricing of the stock was an interesting thing. I got an email from Fidelity and they told me that I needed to indicate my interest once they set the price. And the current price at first was between $62 and $68 this year. Then the next day I got an email that said had been bumped up to $70 to $72 a share. Then I got a final email that said it was $72 locked in and I needed to commit to buying my shares and I could only buy up to $1,000 so I can only get the 13 shares and stay under my thousand dollar limit.
It would’ve been better if I could have bought it at $60 too. And it ended up, I had to buy it at $72. When the stock went public on Friday, it did go up and went up to about $86. And I had heard from Jim Cramer on CNBC that he thought the stock would get all the way up to a hundred. That was in my mind. What I was thinking was, let’s let it get to $100 and then, then sell.
But then what happened was at the end of the day, on the first day, was that it dropped down to $79. And then on Monday it just went down to $66.
My selling strategy: A stop loss
I put in what’s called a stop loss order. That means, I set it at $60 and if the stock goes all the way to $60, then I say sell, sell, sell! That’ll cut my losses, right? I haven’t done the math, but it’s about $150 a loss. That’s the most I could lose. And at this point, because the stock market has been kind of lukewarm to Lyft. I think if it gets back to $75 I will sell. Frankly it would be just great to get my thousand back and be done with it.
Long term: Has Lyft figured out how to make money?
In summary, I did it. I bought the stock. I really don’t think Lyft longterm is going to be a great investment because they haven’t figured out how to make money yet. There are quite a bit different position than Uber. Uber’s in so much more of the world. They have Uber eats, which is making money. They’re further along with the autonomous vehicles.
I just think Uber is an institution that will, will find ways to make money. Lyft, I’m not sure. So as soon as I can, I’m going to let my stock go. But it’s been great fun and I’ve been able to do a lot of TV interviews and radio interviews. People have wanted to ask me, as a driver, what did I think about this and how is it going to go? It’s been a great educational experience and well worth whatever money I might lose.
This is Jay Cradeur with the Rideshare Guy. Thank you for watching. If you have not subscribed yet to this wonderful channel, The Rideshare Guy in Youtube channel where we bring you lots of news, tips and techniques, and ways to make yourself a better driver. You go out and have a great day!
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