Signage for Lyft is seen displayed at the NASDAQ MarketSite in Times Square in celebration of its initial public offering (IPO) on the NASDAQ Stock Market in New York, U.S., March 29, 2019.
Shannon Stapleton | Reuters
Lyft reported second quarter financial results after-the-bell Tuesday, easily beating on both the top and bottom lines. The company also beat analyst expectations when it came to active riders.
Lyft stock jumped 3% in after hours trading.
Here are the key numbers:
Loss per share: 5 cents vs 24 cents per share expected in a Refinitiv survey of analysts
Revenue: $765 million vs $696.9 million expected by Refinitiv
Active riders: 17.14 million vs 15.45 million expected, per StreetAccount
Revenue per active rider: $44.63 vs $45.36 expected, per StreetAccount
The company reported its first quarterly adjusted EBITDA profit, posting $23.8 million. That figure comes a quarter earlier than the company had targeted earlier this year. EBITDA refers to earnings before interest, taxes, depreciation and amortization.
Lyft said its revenue for the quarter jumped 125% year-over-year to $765 million. It gained 26% from the prior quarter.
Lyft said that despite an increase in reported Covid case counts, the company still saw strong demand in July. The company said it had 17.14 million active riders, growing more than 3.6 million from the first quarter.
Lyft reported a net loss for the quarter of $251.9 million versus a net loss of $437.1 million in the same period of 2020. The company said its net loss includes $207.8 million of stock-based compensation and related payroll tax expenses. Lyft said its net loss margin for the quarter was 32.9% compared to 128.8% in the same quarter a year ago.
This is a developing story. Please refresh for updates.
Vlad Tenev, co-founder and CEO of Robinhood, rings the opening bell at the Nasdaq on July 29, 2021.
Source: The Nasdaq
Robinhood CEO Vlad Tenev says he doesn’t believe that the payment for order flow (PFOF) model of market-maker routing that the company incorporates in the U.S. is under threat.
Speaking with CNBC, Tenev defended the practice of PFOF, saying that it’s “inherently here to stay.” He was referring to PFOF as it exists in the United States, where the practice is legal and regulated.
PFOF is the practice of routing trades through market-makers like Citadel Securities in return for a slice of the profits. The phenomenon has helped trading firms like Robinhood drive commissions down to zero, making it cheaper generally for consumers to invest in stocks.
“If I’m a business that’s selling things, and I’m generating transaction revenue, the more you use it, the more money you get. Inherently, there’s a conflict there because I make more money by getting you to transact more,” Tenev told CNBC in an interview.
“I think it’s important not to take the baby out with the bathwater. What does that mean, you shouldn’t make revenue on a transaction-based business? That’s unreasonable. And I think the point has been politicised to some degree.”
PFOF is viewed as controversial because of the perceived conflict of interest it creates between the broker and clients.
Critics say that brokers have an incentive to direct order flow to market makers offering PFOF arrangements over the interests of their clients.
The U.S. Securities and Exchange Commission had looked at banning PFOF in light of concerns surrounding the practice, but opted not to, while the European Union has imposed a blanket ban on PFOF.
PFOF accounts for a small chunk of Robinhood’s revenues today, Tenev said, while much of its income today comes from net interest income which is generated from cash in user balances.
“If you look at equities, PFOF in particular, it’s about 5%. of our revenue, so a much smaller component of the overall pie. And we’ve diversified the business quite a bit,” including other areas like securities lending, margin, and subscriptions.
Robinhood’s race to the bottom on commission fees has forced many major players in the wealth management world to slash their own fees to zero, in turn causing some companies to wind up or sell up to competitors.
“In the U.S., Robinhood came along and really changed the industry,” Tenev said. “The discount brokers that are charging commissions essentially ceased to exist.”
“They had to drop commissions to zero. A lot of them couldn’t survive that transition as standalone companies and ended up consolidating. And we’re still living through the the end result of that.”
TikTok Music has launched on Wednesday in Australia, Singapore and Mexico to a small group of users.
Jaap Arriens | Nurphoto | Getty Images
A federal judge in Montana has blocked a law that would have resulted in a state-wide ban of TikTok starting on Jan. 1, 2024.
Judge Donald Molloy explained his rationale for issuing the preliminary ruling via a legal filing released Thursday, saying the state of Montana failed to show how the original SB 419 bill would be “constitutionally permissible,” among other reasons.
The ruling represents a setback for Montana, whose Governor Greg Gianforte signed into law the SB 419 bill in May, pitching it as helping “our shared priority to protect Montanans from Chinese Communist Party surveillance.”
“Despite the State’s attempt to defend SB 419 as a consumer protection bill, the current record leaves little doubt that Montana’s legislature and Attorney General were more interested in targeting China’s ostensible role in TikTok than with protecting Montana consumers,” judge Molloy wrote in the filing. “This is especially apparent in that the same legislature enacted an entirely separate law that purports to broadly protect consumers’ digital data and privacy.”
A TikTok spokesperson said in a statement the company is “pleased the judge rejected this unconstitutional law and hundreds of thousands of Montanans can continue to express themselves, earn a living, and find community on TikTok.”
However, the office of the Montana Attorney General said in a statement that the judge’s decision is merely “a preliminary matter at this point.”
“The judge indicated several times that the analysis could change as the case proceeds and the State has the opportunity to present a full factual record,” the Montana Attorney General office said. “We look forward to presenting the complete legal argument to defend the law that protects Montanans from the Chinese Communist Party obtaining and using their data.”
Before the judge’s preliminary ruling, Montana was set to become the first U.S. state to ban the popular video and social media app, which is owned by the China-based tech giant ByteDance.
ByteDance sued Montana in May to “prevent the state of Montana from unlawfully banning TikTok,” the company said at the time. Lawyers for the company said in court filings that Montana failed to support allegations that the Chinese government “could access data about TikTok users, and that TikTok exposes minors to harmful online content.”
In March, U.S. lawmakers raised questions about the relationship between the Chinese government and the app’s parent company ByteDance when they grilled TikTok CEO Shou Zi Chew during a hearing. The lawmakers were concerned that the Chinese Communist Party may be able to access the data of U.S. citizens, and have considered implementing a nation-wide ban on TikTok.
TikTok has tried to assuage national security concerns by emphasizing its “Project Texas” initiative, intended to ensure that the data of U.S. citizens remains in the country via the help of enterprise tech giant Oracle.
Amazon and consultants for the company violated federal labor law by interrogating and threatening employees regarding their union activities, and racially disparaging organizers who were seeking to unionize a Staten Island warehouse, a National Labor Relations Board judge ruled.
The NLRB said Friday that Administrative Law Judge Lauren Esposito found Amazon “committed multiple violations” of federal labor law at its largest warehouse in New York, called JFK8, between May and October 2021, a period that saw an increase in organizing activity.
In April 2022, employees voted to join the Amazon Labor Union, a grassroots group of current and former workers, becoming the first unionized Amazon facility in the U.S. Since that victory, the group has been fighting to reach a contract with Amazon.
The judge in New York heard testimony from Amazon employees, managers and labor consultants in virtual hearings that went on for almost a year. Esposito determined Amazon illegally confiscated organizing pamphlets from employees that were being distributed in on-site breakrooms and conducted surveillance of employees’ organizing activities.
Amazon also violated labor laws when it sent an employee at a neighboring facility to JFK8 home early from his shift and changed his work assignments in retaliation for supporting the union, the judge found. The employee, Daequan Smith, sorted packages at a delivery station called DYY6, down the street from JFK8.
Additionally, the judge found that Amazon broke the law when a “union avoidance” consultant, Bradley Moss, who was hired by the company, threatened employees, telling them it would be “futile” to vote to join the ALU. Amazon and other companies often hire labor consultants like Moss, referred to as “persuaders,” to dissuade workers from unionizing. The company spent $14 million on anti-union consultants in 2022, the Huffington Post reported in March, citing disclosure forms filed with the Department of Labor.
As a result of the ruling, Amazon will be required to post notices reminding workers of their rights at its JFK8 and DYY6 facilities. The company also has to make Smith “whole for any loss of earnings and other benefits,” the NLRB said.
In one exchange with a JFK8 employee, Natalie Monarrez, Moss discussed the union campaign at another Amazon facility, BHM1, in Bessemer, Alabama. Monarrez said Moss told her the Bessemer campaign was “not a serious union drive,” but a “Black Lives Matter protest about social injustice.”
“Moss then pointed to the front of the JFK8 warehouse and said, ‘Just like these guys out here, they’re just a bunch of thugs,'” Esposito wrote in her judgment, citing testimony from Monarrez.
Moss and representatives from Amazon didn’t immediately respond to a request for comment.
Employees at BHM1 voted against joining the Retail, Wholesale and Department Store Union in April 2021, but the results of the election were tossed after the NLRB found Amazon improperly interfered in the vote. A do-over election was held last year, but the results remain too close to call.
Amazon’s labor record has been scrutinized heavily, especially as union organizing ramped up in its warehouse and delivery workforce during the Covid pandemic. The company faces 240 open or settled unfair labor practice charges across 26 states, according to the NLRB, concerning a range of allegations, including its conduct around union elections.
The company has also clashed with Chris Smalls, a former Amazon employee and one of the leaders of ALU. A leaked memo obtained by Vice revealed David Zapolsky, Amazon’s general counsel, had referred to Smalls, a Black man, as “not smart or articulate,” and recommended making him “the face” of efforts to organize workers.
Amazon continues to challenge the JFK8 election results, as well as the NLRB and the union’s conduct during the drive. The agency upheld the results of the election in January.