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Suckers.
Lyft's first actions remind people of a fundamental lesson in investing in seemingly new companies you should not miss: do your own research on IPOs, stay away from Wall Street's initial hype and get ready you to volatility. And in the case of Lyft, get ready for early losses.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Lyft shares plunged more than 10% to $ 70.56 on Monday& nbsp; following a wave of sales in the close on the day of the company's IPO on Friday. The first Friday trading was $ 87.24. "Data-reactid =" 17 "> Lyft shares plunged more than 10% to 70.56 dollars Monday, as a result of a wave of sales at the end of the day's introduction into The company's stock market Friday The first Friday trading was $ 87.24.
After Lyft did not finish the trading session on the first day of his trading (it's usually not a good sign for traders), Wall Street seems to have spent the weekend digging again. It's not as if Lyft was a bad company, it's that the road of profits is at best in a few years. In other words, Lyft's business model has not been proven.
This may have a lot of people who got the pure name on the hype Friday re-evaluating.
"We understand LYFT's enthusiasm for the large number of addressable markets (TAMs) and low market penetration, which puts us at the forefront of a change in transportation design and, of course, strong growth in sales. That said, we must simply look too far with too big assumptions to argue in favor of the title. Key issues include limited visibility on the path to profitability, sustainability of revenue growth, the scale of investment in bicycles, scooters and autonomous cars, as well as valuation, "says analyst Jake Fuller. Guggenheim.
Fuller initiated Lyft's hedge with a neutral rating, but without a price target. It's pretty revealing.
Lyft needs a path to profitability
If Lyft does not solve a serious problem that will probably make its initial financial reports valuable lessons on the calculation of losses, then one of the hottest SOPs for some time could reach the failed status within a year (no very different from Snapchat).
The main problem here: Lyft did not prove that he was clearly on the road to profitability.
While Lyft sales more than doubled to $ 2.2 billion in 2018, they lost about $ 911 million. It's good that Lyft's bookings jumped 76% year-over-year to $ 8 billion.
In fact, Lyft's losses have worsened in recent years. Lyft's operating losses reached $ 977.8 million in 2018, compared to $ 708.3 million in 2017, as the pace of incentives for drivers and passengers increased.
It may be time for the founders of Lyft to organize an investor day to restore confidence and talk again.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Brian Sozzi is a senior editor at Yahoo Finance. Follow him on Twitter @BrianSozzi"data-reactid =" 28 ">Brian Sozzi is a senior editor at Yahoo Finance. Follow him on Twitter @BrianSozzi
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