5 reasons not to short-circuit (NASDAQ: LYFT), according to the short-selling activist Citron Research

After diving as low as $ 66.10 per share earlier this week, Lyft Inc (NASDAQ: LYFT) skyrocketed above the IPO price on Friday, rising 4.4% to about $ 75 per share. After reports of extreme short sales at Lyft this week, the headline may have been ironically boosted by one of Wall Street's most notorious short sellers.

Andrew Left of Citron Research says it's never a good idea to bypass a disruptive company like Lyft just because it's not profitable.

"In the past 25 years, we have reduced more actions than anyone reading this article. From Wayfair to HubSpot to our short film Tesla, most of the bad recommendations had a common theme: fast-growing money-losing businesses and important TAM, "Left wrote in a report released on Friday.

Reasons not to short

Left listed five reasons shorting Lyft is a bad idea:

1. Lyft's client base is very young and demographic trends are driving long-term customer growth.
2. Lyft is one of the few companies that allows customers to save time and sell simply by convenience.
3. The millennia trend to get away from owning a car is not just a fad, but rather a long-term transition.
4. Lyft is trading at a discount discount to Uber despite the fact that its market share has increased from 22% in 2016 to 39% in 2018.
5. The future of carpooling as a subscription model offering the opportunity "ultimate blue sky".

Short interest on the rise

Despite the warning, the latest figures from the analysis and financial technology firm S3 Partners suggest that short sellers do not heed these warnings. As of Thursday afternoon, Lyft held approximately 13.4 million shares, or approximately 41.1% of the stock's float.

"As we've seen in most IPOs, it usually takes several weeks for short-term securities to move up, so LYFT's short-term interest should reach more than $ 1 billion. billion in a few weeks, "said analyst Ihor Dusaniwsky.

Until now, the first batch of Lyft short sellers is not doing as well. Lyft's shares were at their highest level of the week Friday at noon.

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