Lyft Extends Plunge Ahead of Uber IPO
From its initial public offering (IPO) price of $72.00 per share less than two weeks ago on March 29, ride-sharing company, Lyft Inc. (LYFT), immediately shot up to its current record high of $88.60. That was on the day of its IPO. Unfortunately, the good news ended abruptly there. In the subsequent week and a half, the stock price has sunk rapidly, with only a brief respite late last week.
The situation got even worse on Wednesday, prompting nearly an 11% drop on the day. All told, from the noted IPO high of 88.60 down to Wednesday’s record closing low of 60.12, Lyft has plummeted by a whopping 32% in nine trading days.
Upcoming Uber IPO Impacting Lyft
Helping to drive the stock’s continued freefall on Wednesday were market rumblings ahead of Uber’s own initial public offering, which could be as soon as early next month. Uber will reportedly make its SEC filings public on Thursday for what is expected to be the largest IPO of the year. According to Reuters, Uber is forecasting a public valuation of $90-100 billion, which is below previous expectations. But it would still dwarf Lyft’s current market capitalization of around $17 billion. And many analysts don’t believe that Lyft deserves even that valuation.
What May Be Next for LYFT?
There are two likely scenarios for Lyft as Uber goes public. If Uber’s stock experiences a sustained rise out of the gates, Lyft is very likely to get a significant lift from its lows on the coattails of its much larger competitor. In an opposite scenario, if Uber’s stock quickly drops or shows lackluster performance in the first few days and weeks after its IPO, Lyft is highly likely to extend its downward spiral.
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Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don