Daily Tech Snippet: Friday, April 7

• Lyft Gets $500 Million in New Funding as Its Rival Uber Wobbles: For years, Lyft has trailed its larger rival Uber in the battle to conquer the ride-hailing market. More recently, Lyft has gotten a boost. The smaller ride-hailing company has secured up to $500 million in a new round of funding that values Lyft at $6.9 billion before the addition of new capital, according to two people briefed on the discussions, who asked to remain anonymous because the details were confidential. The privately held company may raise an additional $100 million, these people said. The financing gave Lyft a $2.4 billion increase in value since the company last raised money in 2016. It was not immediately clear which investors were participating in the new financing. Lyft’s previous investors included the venture capital firm Andreessen Horowitz and Chinese e-commerce company Alibaba. Lyft is being bolstered by the woes at Uber, which has been dealing with scandals involving the company’s workplace culture and aggressive leadership team. A grass-roots movement to boycott Uber has sprung up around the country, with the hashtag #deleteuber spreading quickly across Twitter related to the company’s shortcomings.

• Samsung Withstands Scandals to Report Higher Profit, Revenue: Samsung Electronics Co. posted its best operating profit in almost four years on robust sales of memory chips and displays, showing that the core businesses remain stable even as its mobile unit recovers from a costly recall and the trial of the group’s de facto chief. Operating income rose 48 percent to 9.9 trillion won ($8.74 billion) in the three months ended March, the Suwon, South Korea-based company said in preliminary resultsreleased Friday. That compares with the 9.18 trillion-won average of analysts’ estimatescompiled by Bloomberg. Rising demand for memory chips and organic light-emitting diode screens helped to fuel a rise in sales to 50 trillion won in the quarter, compared with the 49.5 trillion won analysts expected. The results also underscore how the electronics conglomerate is recovering from last year’s Note 7 crisis, when some smartphones burst into flames and forced Samsung to pull it from shelves. That was followed by the arrest of de facto chief Jay Y. Lee in February in connection with an influence-peddling scandal. Samsung’s shares fell less than 1 percent in Seoul. They have climbed about 16 percent this year and are trading near record highs.

• Why Spotify’s IPO-less IPO is a smart idea:Here's a smart idea: In a traditional IPO, the company listing the stock sells shares to a bunch of institutional investors, like hedge funds and pension funds, at an “initial offering price.” The next day, those institutional investors sell those shares on an open exchange like the New York Stock Exchange. This is when regular folks can buy shares, but at a higher price than the IPO. That’s what generates the “pop,” you always read about on IPO day. The pop also comes since the institutional investors should get a return for the risk they took in the IPO. Let’s take a recent, real-world example: Snap sold stock in its IPO last month for $17 a share. That means Snap’s early investors, like Benchmark, got $17 for every share they sold. But the next day, when those IPO investors sold shares on the NYSE, the stock traded at $24, a 41 percent pop above the IPO price. Every penny above $17 is a penny Snap and its early investors didn’t get. So you could argue the pop was bad for the early owners of Snap. They left 41 percent on the table. So you could see how Spotify CEO Daniel Ek might not want to go through the IPO process. Why give all that money to brokers, instead of people who own Spotify, like his investors, his employees and Ek himself?  Instead, by listing directly, Spotify can skip the IPO pricing altogether and just sell shares on an open exchange. The conceit of a direct listing is that it’s more democratic, very logical, very internet. You can see the appeal to Ek. But there is a rationale for the IPO process too. By hiring underwriters, a company is “pre-selling” shares to qualified buyers. That assures the company will get something for its shares while also stoking interest in the open market. You might even argue that in the case of Snap’s IPO it might not have even gotten $17 a share if they hadn't hired bankers to manage the sale. In effect, the bankers set a price range, then go to the big institutional investors to see where they’ll bite before narrowing in on a set price. (Some analysts have pegged $15 as a fair value price for Snap shares.) Underwriters like Goldman Sachs are paid as much as 7 to 8 percent commission for their work, but companies can negotiate that down. In the case of Snap, it was about 2.5 to 3 percent, according to sources.