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Short sellers have extended their bets against Lyft to levels rarely seen for newly listed companies, as the car reservation sector continues to languish below the price of its offer.
Data from S3 Partners, the company's badysis, showed that at the end of Monday's second trading day, investors had sold 12.4 million Lyft shares. a value of $ 856 million, or 38% of the available shares traded on the stock market.
The S3 data was released Wednesday, the same day it appeared that Carl Icahn, the long-time activist investor Lyft, had sold his 2.7% stake in the company before its IPO.
Mr. Icahn's stake, which would have been worth about $ 550 million at the introductory price of $ 72 per share, was sold at some point between March 1, when Lyft released his paperwork , and March 18, when the company set its initial price. range for the supply, said a person familiar with the trade.
The news of his departure will provoke an intense debate about whether the company, extremely deficit, will justify the valuation of $ 24 billion that was awarded during its IPO.
Mr. Icahn originally invested $ 100 million in Lyft in 2015, saying "carpooling was about to become a cornerstone of our transportation infrastructure." He invested an additional $ 50 million in the company the following year, according to Lyft's regulatory filings.
As part of the terms of his investment, Mr. Icahn has appointed a Lyft Board Representative, Jonathan Christodoro, Chief Executive Officer of Icahn Capital until 2017. Mr. Christodoro resigned from Lyft's Board in March , before the IPO, according to documents filed by Lyft. .
According to the person who is familiar with Mr. Icahn's business, Mr. Christodoro was the only member of the Lyft Board of Directors to vote against the company's plan to create a two-clbad share structure. which would give its founders, Logan Green and John Zimmer, a nearly 5 percent control of the company between them.
Mr. Icahn's representatives did not respond to requests for comments on the sale, was first reported by The Wall Street Journal. Lyft refused to comment.
After peaking at $ 88 after trading began on Friday, Lyft reduced its first-day gain to 9% and continued to fall on Monday and Tuesday this week. On Wednesday, the stock closed at $ 70, up 1.5% on the day.
The short-term interest is "huge," said Ihor Dusaniwsky, general manager of predictive badytics for S3 Partners. "There are a lot more short circuits than any IPO I've seen in a long time."
Dusaniwsky said several types of investors were betting on the stock, including value-oriented investors who thought the stock price was out of step with its profit potential, and that hedge funds wanted to bring down shares down.
"It's a two-pronged attack on Lyft," said Dusaniwsky. "It's a game of value but also a dynamic technical game."
In comparison, short positions on Levi Strauss, which were made public earlier in March, account for only 2% of available shares, according to S3. Snap, the social media app, sparked keen interest shortly after its IPO, but that accounted for only 20% of stock available 10 weeks after the launch of the deal, about half of the stock. interest paid by Lyft.
The options on Lyft will begin trading Thursday, offering investors alternative ways to bet on the next move of the action. The company has been scrutinized as a test of the demand for so-called unicorns – start-ups whose private valuation exceeds $ 1 billion – are expected to enter public markets this year, including Uber , the main rival of Lyft.
Analysts have warned that these companies could be far from profitability after years of rampant private capital spending that has allowed them to grow without generating profits.
"I would say that the short interest comes from the smart money that [thinks] Lyft and Uber pose a valuation problem, "said Trip Chowdhry, equity badyst at Global Equities Research. "Many investors become euphoric when they hear something new. In this scenario, the laws of physics are always topical: gravity will prevail and the fundamentals will prevail. "
Other investors believe that the growth of the car reservation sector will support long-term shares.
Andrew Left, a short-seller and founder of Citron Research, bought the company before it went public and fell under a 180-day lock-in period that forbids early investors from buying short positions. He added that Lyft's stock could continue to fall, but that the company's long-term outlook was good.
"It's not like Snap, where you've seen it crumble after the IPO," he said. "Carpooling is a changing business and there are two [dominant] companies. There is no reason that it is not a $ 200 billion business. "
Additional report by Nicole Bullock
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