Chinese ride-hailing company Didi has already become a retail-trader favorite in its first day on the public markets, Bloomberg first reported.
According to data from Fidelity, Didi shares ranked number one among retail traders Wednesday, while Exela Technologies, which has seen heightened interest from Reddit investors this week, was second, and well-known meme-stock AMC Entertainment was third.
Didi had more than 32,000 buy orders as of 3:15 p.m. in New York, compared to Exela and AMC, which each had about a third of that, the data showed.
Didi’s debut is the second largest among Chinese companies, after e-commerce giant Alibaba’s initial public offering in 2014. The shares soared as much as 28% in their first day of trading, giving Didi an approximate $86 billion valuation, Markets Insider reported.
The valuation makes Didi the second largest ride-hailing app in the world after Uber, which is valued at $93 billion.
Rumors about a potential IPO spread for several years before the company eventually filed its prospectus earlier this month, Fortune reported. Among Didi’s largest shareholders are investment firm SoftBank, which has a 21.5% stake, Uber, which has a 12.8% stake, and Tencent, which has a 6.8% stake, Fortune said.
Shares of Didi soared as much as 28% in its IPO debut on Wednesday, lending the Chinese ride-hailing platform a valuation of about $86 billion.
The firm priced its IPO at $14 per share and raised about $4.4 billion in proceeds, making it the largest IPO for a Chinese firm since Alibaba in 2014. At the IPO price, Didi was valued at about $67 billion. The company sold 317 million shares, and had guided for an IPO price range of $13-$14.
Didi is the second largest ride-hailing app by market value in the world. Uber currently sports a valuation of about $93 billion, while Lyft trades at a $20 billion valuation.
The company generated $1.6 billion in losses on $21.6 billion in revenue in 2020, representing a year-over-year revenue decline of about 10% due to the COVID-19 pandemic, according to its SEC filings.
Didi sports a number of high profile investors, including Apple, which invested $1 billion in the ride-hailing company in 2016. Meanwhile, the SoftBank Vision Fund holds a 21.5% stake in Didi, while Uber and Tencent own a 12.8% and 6.8% stake in the company, respectively, according to Bloomberg.
Whether US investors will have a strong appetite for shares of Didi over the long-term is still up in the air, as some investors have been burned before by high profile IPOs of Chinese companies. Last year, Starbucks competitor Luckin Coffee plunged more than 80% after it admitted to fabricating $310 million in sales. The Chinese-based coffee chain eventually filed for Chapter 15 bankruptcy.
Lyft cofounder John Zimmer said earnings for its drivers are soaring as the ride-hailing app struggles to find enough drivers to meet the high demand for rides.
But while drivers are making more money than before, the supply shortage has led to higher fares for customers, Lyft’s executives said during at its first-quarter earnings call Tuesday.
Demand for ride-hailing apps, including Lyft and Uber, plummeted during 2020 as people stayed at home during the pandemic. But demand is now “improving rapidly” as the US economy reopens, Zimmer, who serves as Lyft’s president, said.
Wedbush analyst Dan Ives said that he expects Lyft to see a “roaring 20s-like” rebound into the second half of 2021 as both business and leisure travel rise.
But the number of available drivers is down. Insider’s Tom Dotan reported that more than half of Uber and Lyft drivers stopped driving during the pandemic, and that number has far from recovered.
And because demand outstripped supply, Lyft said it hiked up prices for its ridesharing. Zimmer said that this was an industry-wide trend, meaning that it didn’t deter many customers from using Lyft. He added that this trend would likely continue in the second quarter.
Lyft’s executives said that these higher fares, in turn, led to higher wages for its drivers.
Zimmer said that in many markets, average hourly driver earnings have been up “meaningfully” compared to pre-pandemic levels, and in some markets have reached “all-time highs.”
He said that drivers in Lyft’s top 25 markets were earning more than $30 per hour on average in April, which he said is up more than 85% compared to pre-pandemic levels.
Lyft expects its driver supply to rebound
Zimmer said that the company expected to see driver supply recover “in the coming months.”
“As pandemic conditions continue to improve and health safety concern abate, we see more drivers feeling more comfortable getting back behind the wheel,” he said. “As the vaccine rollout continues, driver availability should naturally improve.”
He said the company is also bumping up driver incentives, such as enhancing its app so that drivers can find more opportunities to maximize their earnings.
Zimmer also said the company expected people in other forms of app-based driving work to transition to rideshare driving.
He said that rideshare work generally brings in higher earnings than food delivery, and has better opportunities for social interaction, which he said drivers are “craving” after a year of social distancing. He added that demand for food delivery might slow down as the economy reopens, leading to some drivers moving back to ridesharing.
Logan Green, Lyft’s CEO, also said that the end of federal unemployment benefits in the third quarter could lead to more drivers for the app.
Other industries have also been hit by huge labor shortages in early 2021. Restaurant chains like Subway and Dunkin’ are cutting hours, closing dining rooms, and pushing employees to work harder than ever to cope with the lack of available workers.
Toyota Motor Corp will acquire Lyft Inc’s self-driving technology unit for $550 million, the companies said, as the Japanese firm steps up its automation ambitions with the newly created Woven Planet division.
The acquisition of Level 5 automation will also provide Toyota access to the US ride-hailing firm’s more than 300 employees of the essentially complete autonomy technology.
“This is the first step of establishing and bringing together the people. Obviously building technology and product requires people, and that’s much what this acquisition is about,” Woven Planet chief executive James Kuffner told reporters on Tuesday.
It will also give Toyota a direct presence in Silicon Valley and London and expand smart-city project “Woven City” at the base of Japan’s Mt. Fuji, effectively helping it ride through dramatic changes expected in the mobility industry and major centres, he said.
For Lyft, the deal will allow it to become profitable sooner and takes away the burden and risk of developing a costly technology that has yet to enter the mainstream.
Kuffner said Woven Planet, which was set up in January, intends to continue investing and growing the team, although he refrained from commenting about any timeline or future acquisition plans.
Takaki Nakanishi, an auto industry analyst and chief executive of the Nakanishi Research Institute, said by expanding partnerships, Toyota is “moving a step towards realizing its goals,” including self-driving technology.
Toyota has other self-driving projects in the works
Toyota, which currently offers Level 2 automation with advanced driver assistance technology, has other self-driving projects and has been working closely with ride hailing firms.
It owns a stake in China’s top ride-hailing firm Didi Chuxing and Southeast Asia’s Grab and also had a stake in the self-driving unit of Lyft’s larger rival Uber Technology Inc, but transferred the stake when Uber sold the unit in December to car startup Aurora.
Toyota said in February it would develop and build autonomous minivans for ride-hailing networks with Aurora and longtime supplier partner Denso Corp.
Lyft’s sale allows it to offload cash-burning side businesses and focus on reviving their core divisions following a bruising pandemic year.
It will receive $200 million cash upfront, with the remaining $350 million paid over five years.
Lyft did not immediately say how it plans to invest the funds. But the sale will allow Lyft to report third-quarter profit on an adjusted basis of earnings before interest, taxes, depreciation and amortization as long as the company continues to recover from the coronavirus pandemic, it said.
The sale will also remove $100 million in annual net operating costs, Lyft said.
Lyft will now focus on what it can do best with autonomous vehicles by offering services such as routing, consumer interface and managing, and maintaining and cleaning partners’ autonomous vehicle fleets, which could mean added revenue, it said.
Lyft already allows consumers to book rides in self-driving vehicles in select cities in partnerships with Alphabet Inc’s Waymo and Motional, the joint venture between Hyundai Motor Co and Aptiv.
It will continue to collect real-world driving data through some 10,000 vehicles it rents out to consumers and ride-hail drivers. The data is valuable for the development of self-driving vehicles that Woven Planet will have access to under the deal.
But Lyft also believes human ride-hail drivers will remain important for the foreseeable future to serve customers during peak demand periods, bad weather, or in areas that self-driving cars are unable to navigate.
Lyft is taking a page out of the taxi playbook by letting people in select Florida cities call for a car instead of using the Lyft app.
The new feature allows passengers to book an on-demand ride by speaking to a Lyft agent at 631-201-LYFT between Monday to Friday from 8 a.m. to 8 p.m. Processes that are needed to hail a Lyft car through the app can then be completed over the phone. This includes making the credit or debit card payment, and verbally agreeing to health protocols implemented during COVID-19.
Instead of tracking the trip’s progress through the app, Lyft will then text its Call A Lyft Ride passengers with ride information and a tracking link that can be shared with other people.
According to Lyft, this new ride hailing option is “perfect” for seniors and people unable to use the app in Florida cities like Boca Raton, Orlando, Miami, and Fort Myers. You can find the full list of eligible cities on Lyft’s website.
This isn’t Lyft’s only app-less ride hailing option: passengers can also request a ride through ride.lyft.com. Like Call A Lyft Ride, users who’ve booked a car through the website will receive texted updates about the journey.