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Members, Sippik, a registered broker dealer. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Oh, typos. We have all made them in work emails. I know I've said, Give me a sec, instead of, Give me a sec, an awkward amount of times. But normally, when it comes to typos, the worst case scenario is you're embarrassed. But for Lyft, a typo this week led to a market cap decline of over $2 billion. When we did an encore over the weekend of the Money Rehab episode with Lyft co founder and former President John Zimmer, I had no idea that days later Lyft would be smack dab in the middle of headlines. Here's what happened. We're in the thick of earnings season, the time when public companies report to investors how they did financially over the last quarter. These earnings calls can have a big impact on the company's stock price. Now, if you invest in index funds or ETFs, my favorites, earnings calls won't affect your investments very much because index funds and ETFs shelter you from all of these fluctuations of one given stock. That's the whole point.

But if you invest in specific companies, you will certainly be affected by their earnings calls. And if you're a day trader, then earnings season is your time to shine or not. Buying and selling a company's stock around earnings is a popular move for day traders, especially buying and selling stock options, which is a trading move that is essentially betting the price will go in a particular direction after the earnings call. The payoff can be big, but it's far more likely that you will lose money, especially if you're a novice. Now, there are some obvious announcements that can affect a stock price. Like if a company reports lower measures of financial success, the stock price goes down. If a company reports higher, the stock price goes up. This is what happened to lift. Kind of. On Tuesday, the company shared their earnings release that they were expecting one of their profit margins to expand by 500 basis points in 2024. Now, a basis point is a weird finance term that represents one 100th of a percentage. Why do we have to know this? Well, I'll circle back to it in a second, but for now, let me just translate.

When Lyft said they were expecting one of their profit margins to grow by 500 basis points, they were saying they were expecting a 5% growth. So basically, take that decimal point and scooch it over two places and you get 5.00%. The The stock market loved this news, and as a result, their stock shot up 60%, but that 5% growth, that was a typo. Lyft's CFO had to clarify that they were actually only expecting the increase to be 50 basis points, not 500. 50 basis points is 0.5%. That is a very, very different picture than 5%. And that's why we need to know basis points, ladies and gentlemen. The clarification from Lyft's CFO will cause the stock to plummet, erasing over $2 billion in market cap. Quick nictionary note here, market cap, short for market capitalization, provides investors with insights into a company's size relative to other companies, and often investors will use market cap as a measurement of value. This crazy story, though, is such an excellent cautionary tale for trying to play investing games around earnings reports because there are all sorts of factors that will affect stock prices that we can never, ever predict.

If it were not for this typo, Lyft would have had an awesome week. Lyft actually reported a 4% or 400 basis point increase in revenue compared to the prior year. And that stat is actually accurate, thankfully. If this type thing would have never happened, this good revenue news alone probably would have gotten them some love from the market and the price would have likely gone up. In fact, the news cycle recovered from Lyft's, Whoopsy, and the day after the typo news broke, the stock did jump 35 % to $16.39. It's the highest close in more than a year. But the market is just so sensitive. Trying to predict it is like trying to predict what I'm going to say when I'm hungry. And I can confirm I am very unpredictable in that state. And even though Lyft had a pretty graceful recovery from this super cringey moment, all I can hear as I think about this story is the exchange from my conversation with John Zimmer.

Does it suck more now being a public company? It always sucks, and there's always chaos, and that's the only thing that's ultimately constant. But for a while, you weren't a public company, so you dealt with that between you and Logan, I suppose, and the rest of the team. But how did that change in the pressure being public?

There are moments that suck more. I'd say the fact that you have a external barometer that goes up and down, sometimes with extreme volatility related to external events as well as events specific to us, that That can be difficult. But if you have a long term view and you don't let those things get to you too much and you just heads down operate, I think overall it is a positive. If you blur your eyes on the short term volatility and think about what the market is telling not only our company, but all of these companies, it might not always be a straight line trend of sharing this feedback. I think overall it is helpful. And by going public, we were able to raise enough capital that allowed us to not need to raise any more capital ever again. So overall, I'd say it's a positive, although, yes, there are shitty or sucky periods.

Is it possible to blur your eyes or put your blinders on or whatever? How often do you check your stock price?

It is honestly more frequently than I should. And so I'm probably looking at it every day. Part of it is I need to know what's happening because we're managing a team that looks at it. Hopefully, they don't look at it that frequently, but it is part of many of our team members' compensation, and I care very deeply about them having a good experience. And I care deeply about our ability to retain them. And so it's an important data point for me to understand and something we need to manage. But the blurry eyes comment is more about, Okay, there's The things we control on it, I want to know about and I want to control. The things that are less in our control, I need to make sure I put more of my energy and the team's energy into things that will drive long term value for shareholders and for the overall mission.

And how would you suggest or maybe even take this advice yourself to wean yourself away from the compulsion of constantly refreshing and refreshing if you're, let's say, an employee at a public company and a lot of your comp is involved in it, or if you're a new investor, it's very cool to say you're a longtime customer of Lyft, now you can buy the stock and now you're an investor. But how do you have boundaries?

Yeah, I mean, I think just setting a goal for your investment. Just jumping into an investment without a goal is not ideal. So if your goal is over three years to see that stock go up X or Y % because you believe it's undervalued or believe they can do A, B, or C, that is helpful to have that, Okay, in three years, I'd like to see this type of return. Therefore, I really only need to check it literally every year. Now, I doubt people will, because their money is on the line, it is a normal thing to want to check it. We had one investor who I won't name during our IPO, and they said, Hey, just so you know, we're extremely long term investors. We're probably not check your stock for the first few years. Whatever. No, this was- Seriously?

This is like a certain- Like institutional?

Institutional type of capital that actually I do believe they do do that. So for me, it's helpful as most investors will not do that, and most people will not do that. But it's a helpful reminder that this institution has done extremely well because they are not not paying attention to the volatility in the near term and that they are focused on their goal, which is long term value creation. So every person will have to find their balance.

We, as investors, can take a lesson from John. If you're diversified in lower risk investments like S&P 500 index funds and investing smart for the long term, you have to put your blinders on. You can't get off the roller coaster in the middle of the ride. For today's tip, you can take straight to the bank. If you're interested in getting into options trading, which again, I do not recommend for beginner investors. But if you're not going to listen to me and you're looking at options trading for a particular company, you should make sure you're paying close attention to the company's implied volatility around earnings season. If you're on a trading platform, implied volatility is going to be represented as the word vagal. Vega, V-E-G-A. Volatility is a factor that experienced traders can profit from, but it's a variable that can also screw you over if it doesn't go your way. So if the implied volatility is going up, proceed with caution, or better yet, don't proceed at You know my mantra, index funds and chill. Did you know that even if you have a 401k for retirement, you can still have an IRA?

Robinhood has the only IRA that gives you a 3% boost on every dollar you contribute when you subscribe to Robin hood Gold. But get this, now through April 30th, Robin hood is even boosting every single dollar you transfer in from other retirement accounts with a 3% match. That's right, no cap on the 3% match. Robin hood Gold gets you the most for retirement thanks to their IRA with a 3% match. The offer is good through April 30th. Get started at Robinhood. Com/boost. Subscription fees apply. And now for some legal info, Claim as of Q1 2024, validated by Radius Global Market Research. Investing involves risk, including loss. Limitations apply to IRAs and 401(k)s. 3% match requires Robinhood Gold for one year from the date of the first 3% match. Must keep Robinhood IRA for five years. The 3% match Couching on transfers is subject to specific terms and conditions. Robinhood IRA, available to US customers in good standing. Robinhood Financial LLC, member CYPEC, a registered broker dealer.

As a small business owner myself, or as I like to call it, a pre-big business owner, I know how critical hiring is to the success of a company. When you have a pre-big business, hiring isn't just adding a new employee, it's adding a new family member. The problem I run into is that I don't have the time or the resources to give hiring the TLC it deserves. That's why I love LinkedIn jobs. Linkedin isn't just another jobsport. Linkedin is a vast network of more than a billion professionals, which makes it the best place to hire. It gives you access to professionals that you can't find anywhere else. Linkedin does all of that while making the process easy and intuitive. Hiring is easy when you have that many quality candidates. So easy, in fact, that 86 % of small businesses get a qualified candidate within 24 hours, and it really works. 2.5 million small businesses use LinkedIn for hiring. You can post your job for free at linkedin.

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That's linkedin. Com/mnen, as in Money News Network, to post your job for free. Terms and conditions apply. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan LaVoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your moneyquestions, moneyrehab@moneynewsnetwork. Com, to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.