Lyft Stock Slips Below its IPO Price After Receiving its First Sell Rating
【Summary】Lyft received its first negative review from an analyst who is skeptical that consumers will give up personal car ownership in favor of relying on ride-hailing services. Lyft’s shares fell as much as 4.2 percent to $66.10 on Tuesday, their second straight session of losses after $72 initial public offer on Friday.
Ride hailing-company Lyft Inc. became the first ride-hailing company to go public last Friday, beating its chief rival Uber to an IPO. Lyft shares, trading on the NASDAQ under the symbol LYFT, initially surged 10 percent higher, but have since fallen further below its IPO price on its third official trading day.
Lyft also received its first negative review from an analyst who is skeptical that consumers will give up personal car ownership in favor of relying on ride-hailing services.
Lyft's shares fell as much as 4.2 percent to $66.10 on Tuesday, their second straight session of losses after $72 initial public offer on Friday. Lyft's IPO is one of the most anticipated IPO's from a tech company. The stock was down 2.3 percent at $67.41 early on Tuesday afternoon on the Nasdaq.
Michael Ward of Seaport Global Securities initiated coverage of Lyft with a "sell" rating and a $42 price target, which is 42 percent below the initial public offering price of $72. with analyst Michael Ward calling the stock's current valuation a "leap of faith" that consumers will forego owning cars in favor of using ride-hailing services.
"Despite the optics of vehicles being an underutilized asset, we believe people will continue to own their own vehicles as primary transportation and instead rely on the ridesharing services as a convenient supplement," Ward wrote in a client note.
Lyft's valuation surged to $25 billion after its IPO and its main rival Uber could be as high as $120 billion when the company goes public later this year. However both companies remain unprofitable, which doesn't sit well with many investors. On the upside, Unlike Uber with its global reach, Lyft only operates in North America, so it still has substantial growth potential.
"We have a history of net losses, and we may not be able to achieve or maintain profitability in the future," Lyft wrote in its IPO prospectus released on March 1, adding that it expects to spend more as it expands into new offerings and locations.
Another five analysts have initiated coverage of Lyft, with two of them recommending the stock and three assigning neutral ratings, according to Reuters.
Lyft's losses widened in 2018, although revenue doubled to $2.16 billion. The company is still gaining market share from rival Uber. Those five analysts on average expect Lyft's revenue to jump 60 percent to $3.45 billion in 2019, while Ward estimated 2019 revenue would reach $3.40 billion.
In Lyft's IPO prospectus, the ride-hailing company said it controlled 39 percent of the ride-hailing market in the U.S. However Second Measure, an analytics firm which tracks credit card transactions, estimates Lyft's market share at 28.4 percent.
Lyft reported a loss of $911 million in 2018 and a $688 million loss in 2017. The company has not said when it expects to become profitable.
Automakers Ford & General Motors are Allowing Rival Tesla to Lead U.S. EV Production Until at Least 2026, Data Indicates
Toyota is Developing a Hydrogen-Powered Fuel Cell Truck With its Hino Motors Unit
Electric Automaker Tesla is Forced to Reduce its Workforce By 75% at its Fremont, California Factory
Waymo, Others Stop Testing Self-Driving Cars on California Roads Due to the Coronavirus
Tesla Begins U.S. Deliveries of the Highly Anticipated Model Y
U.S. Automakers General Motors & Ford Instruct Employees to Work From Home Beginning Next Week Due to the Coronavirus
Volkswagen is Exploring Ways to Use its EV Batteries to Power the Grid
The Coronavirus is Disrupting Auto Manufacturing in Mexico and Europe as Parts Shipments From China Slow
- Former Uber CEO and Co-Founder Travis Kalanick to Resign From its Board, Cutting All Ties to the Company
- Toyota’s New Hydrogen-Powered Mirai Sedan Could Become a Serious Alternative to Electric Cars
- Self-Driving Semi-Truck With Plus.ai Technology Completes First Coast-To-Coast Trip
- Apple Engineer Involved in Fatal Accident in 2018 Complained About Tesla’s Autopilot
- Tesla’s CEO Showcases How EVs Will Talk to Pedestrians
- BMW Shares Some of its AI Algorithms Used in Vehicle Production on GitHub
- Ford’s Next EV Following the Mach-E Might Use Volkswagen’s Electric Powertrain
- Consumer Interest in Tesla Spells Bad News for the Rest of the EV Industry, Claims Bloomberg
- Hyundai's Kona Electric SUV Will Get a Range Boost to 301 Miles Starting This Month
- Ride-Sharing Startup Via Launches the Largest U.S. ‘Micro-Transit' Service in California