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Lyft shares plunged
Insider Markets
Things were going pretty well for Lyft a little over a month ago.
The mobile company set its initial public offering at $ 72 per share at the end of March, giving it a valuation of about $ 24 billion.
The pricing was at the upper end of Lyft's projected range, and Reuters reported that the IPO was oversubscribed.
But stocks have deteriorated and have not yet regained their highest opening volume.
After opening at $ 87.24, the shares slipped throughout the session on the day they opened and closed at $ 77.75. Lyft then fell below the price of its IPO on its second day of trading.
The stock has now fallen 20% from its price of $ 72 and 35% from the start of stock trading. Shares hit a new low of $ 54.35 on Friday but ended the day higher.
Wall Street is extremely bullish
REUTERS / Dylan Martinez
Wall Street is extremely bullish on Lyft. It was not always like that.
Of the analysts surveyed by Bloomberg, 14 rate the title as a "buy", eight say "held" and only one recommends "sell".
The largely positive ratings came after major Wall Street companies such as JPMorgan and Credit Suisse, some of Lyft's largest underwriters, were allowed to comment on the stock earlier this week after the end of the post-recession period. -IPO.
Previously, Wall Street was more neutral, citing growing competition and the company's fuzzy road to profitability.
"Our bullish thesis is motivated by the company's significant market opportunity, its history of innovation and its path to profitability as the company evolves," wrote in a note. Previously published JPMorgan analysts led by Doug Anmuth, whose target price is US $ 82. the week.
The public debut of Uber pose an imminent threat
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Uber – the biggest threat analysts see for Lyft's competitive position in the roaming taxi market – continues to stumble its smaller rival.
Lyft shares fell to $ 54.35 on Friday to hit a new low after the IPO after rival Uber updated its S-1 filing with the Securities and Exchange Commission. This is the second time this month that Uber's IPO punishes Lyft's shares. Earlier in April, when Uber asked to go public, Lyft fell to its lowest level until that point, while analysts worried about the competition.
Because of its size and market share around the world, Uber is much bigger than Lyft. Uber is aiming for a valuation up to $ 90 billion, while Lyft has debuted nearly $ 24 billion.
"If Lyft is purely a national seller in the United States, there are still some jokers in the company's ambitions for autonomous vehicles, international expansion," as well as new market share gains, wrote Dan Ives, analyst of Wedbush, in a note the customers.
Short sellers target the stock
Mario Tama / Getty Images
Short sellers increased their bets against Lyft.
While the first count of borrowed shares rose to 9.4 million in early April, this amount has risen from 7.5 million to 16.9 million, according to an analysis by IHS Markit.
Earlier this month, Lyft quickly became the most expensive stock for sale in the United States, according to Markit's analysis of the loan activity and associated fees . The costs of borrowing have dropped considerably, so this is no longer the case.
Certainly, new public companies are often a boon for short sellers looking to make money with decreasing enthusiasm after the hype ends.
"It's typical of IPOs, what was really remarkable at LYFT was how much the fees were high for the first day, but they dropped dramatically in the first few days," said Sam Pierson, director of securities financing at IHS Markit. Friday.
It is difficult to evaluate Lyft and other driving aid applications
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Passenger companies are new to government procurement, and analysts used to comparing new public enterprises to their existing peers have expressed difficulties with this task.
And there are so many uncertain elements to consider. Lyft lost $ 911 million last year, and while it's not uncommon for startups looking to accelerate growth, its balance sheet makes it difficult to gauge future profitability and the company's true value.
Uber, on the other hand, estimates it has lost at least $ 1 billion in the first quarter of this year alone.
"In our opinion, the valuation is the most difficult task of LYFT," said Michael Ward, an analyst at Seaport Global, which holds the only "sale" rating on Wall Street.
"Most investors know the name of the brand and the service.To justify its current valuation in the market, investors must believe in them that millennia and generations later renounce the ownership of a vehicle and opt instead for trust carpool service. "
At the same time, analysts are trying to determine the kind of impact they think Uber will have when it starts trading.
"While our analysis of the economic situation of the units suggests that profitability is possible (what we are modeling for seven years now), the extremely competitive nature of space and the fact of confronting it. facing an aggressive # 1 player at Uber makes it difficult to predict future customer acquisition costs Shyam Patil, an analyst at Susquehanna, wrote in a note to customers last week.
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