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Lyft’s stock declining alongside Uber — when will the shorting stop?

Lyft stock

Do you remember Lyft? The second largest player in the ride sharing sector and longtime competition of Uber. Well Lyft while being second largest, was the first to face a major decline in its share price after an over hyped IPO.

Lyft stock  faced a decline over 7% in Mondays trading, falling into the same decline that Uber has faced in the hours and days after its Fridays IPO. What is not benefiting Lyft is the reverse momentum in the share price after the companies own IPO in March, and the current state of the US and China trade war.

When we look at Lyft’s stock, it is currently sitting at $47.84 cents per share, a huge decrease from its IPO value which was at $88.60. The stock itself is also trading marginally lower than the $72 a share it was priced at on the roadshow.

Wedbush analyst Dan Ives mentioned in a note to investors that Lyft stock could see a further decline of 5% to 10% in share price due to short order as investors are concerned about the lack of profits, and a seemingly weaker market weakness. But selling may subside a bit within the next few weeks as investors can start buying again at a lower value.

“If the stock falls another 10%, you can see investors sharpen their pencils on valuation and see a rally,”

Ives said.

In Lyft’s first earnings report earlier this month, Lyft did not impress investors with very little to show in terms of profit. As it stands Lyft lost $211 Million after adjustments in the first quarter of 2019. What has sparked more fears into investors is that the company have also set guidance to adjust losses from $1.15 Billion USD to $1.175 Billion. Additionally Investors have been left feeling upset by Lyft’s lack of transparency when it comes to disclosures regarding their bookings. As long as Uber remains under pressure, the same sentiment could be shared with Lyft, considering Uber lost 10% stock value on Monday it would seem the company is not out of hot water yet.

Jessica Chew – AMT Associates



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