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Greetings! Does Lyft need a new engine to jump-start its performance? We're thinking of activist investor Engine Capital, which has taken a stake in the ride-hailing firm and today said it would mount a proxy contest to win seats on Lyft's board. Lyft's stock price has been stalled (sorry) for years, trading at roughly 80% below its 2019 IPO price. It's in the doldrums because of its No. 2 status in the U.S. ride-hailing market and its lack of diversification. Unlike its larger rival Uber, Lyft hasn't broadened into food delivery or internationally (at least until it announced a deal today to buy a European taxi-booking app). Despite that sorry track record, Engine faces an uphill battle. Lyft's co-founders, Logan Green and John Zimmer, between them own 30% of the votes despite holding only about 2.3% of the shares, thanks to supervoting shares. Moreover, Engine doesn't offer any particularly brilliant insights about how to fix Lyft. The investor acknowledged that the company's operational and financial performance had improved in recent years, which is likely due to the actions of CEO David Risher, a former Amazonian who took the reins two years ago from Zimmer and Green. Engine's complaint is that Lyft's stock price hasn't responded to the business improvement. The investor is correct, but that's likely due to investor skepticism about Lyft's growth prospects. Engine recommends that Lyft buy back more shares and cut back on employee stock compensation by starting to pay cash bonuses. Engine complains that handing out lots of stock to employees dilutes public shareholders. While Engine is absolutely right about stock compensation, as we've written about before, its suggestion is unlikely to make a huge impact on Lyft's stock in the near term. (Engine also needs to get out more: Its filing says that "in more than 20 years analyzing public companies, this is the first time we have encountered such a compensation model." Really?) Short of someone emerging with a rich offer for Lyft—if that was going to happen, it likely already would have—shareholders have to hope that over time, Wall Street will recognize what Risher has accomplished. (Here's our True Value bull case for Lyft stock.) It couldn't hurt Lyft to add Engine's representatives to its board. Whether that will help much is a whole different question. Mark Zuckerberg's witness testimony in the Federal Trade Commission's antitrust trial against Meta Platforms has shed new light on all sorts of things at the social network giant, as we've written here and here. One thing that has come through loud and clear is that the popularity of Meta's apps, particularly Facebook and Instagram, has suffered from competition posed by TikTok in particular, as well as other apps. Today, for instance, Zuckerberg said Meta apps' share of the time people spend on social media had "gone down meaningfully," as the interaction people have with friends has shifted to messaging apps. This isn't the sort of thing Zuckerberg has said on earnings calls. It may not be a coincidence that Meta's stock, which has outperformed most other big tech stocks in recent months, has traded badly in the past few days. Since April 9, Meta shares are down 14%, while the Nasdaq Composite Index has fallen just 4.8%. • Software startup Rippling is finalizing a deal to raise hundreds of millions of dollars from investors including Goldman Sachs, Singaporean sovereign wealth fund GIC and venture capitalist Elad Gil at about a $16 billion valuation, people familiar with the matter said. • Tesla's stake as the dominant electric vehicle vendor in California is slipping. Tesla registrations fell 15% in the first quarter from a year earlier, according to the California New Car Dealers Association, while registrations for all other EVs shot up 35%. Tesla's share of the EV market dropped to 43.9% from 55.5% in the first quarter of 2024. • OpenAI is in discussions to buy Windsurf, maker of a popular AI coding assistant formerly known as Codeium, for $3 billion, according to Bloomberg. • OpenAI on Wednesday released two new models, o3 and o4-mini, in its line of reasoning artificial intelligence, which uses greater computational resources to solve more complex problems and come up with new ideas. Introducing: Applied AI. This new newsletter explores how businesses and leaders are using AI to innovate, improve efficiency, and foster collaboration. Stay ahead with insights and stories on the transformative power of AI. Sign up here. | 
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