Shares of Lyft fell sharply on Monday, extending a slide that has pressured the company since it went public a few weeks ago.
The latest downshift in the shares comes after ride hailing rival Uber last Thursday made the paperwork for its upcoming listing public. The financial information laid out by Uber, which plans to list on May 10, according to people familiar with the matter, indicated the company was burning through tremendous amounts of money to maintain its market share as growth in its core businesses stalls.
“One of the main takeaways from the Uber filing was a somewhat mixed view for Lyft in that Uber has really been taking down their margins over the course of 2018,” said Tom White, equity analyst at DA Davidson. “The biggest competitor in the space is signalling they’re going to more aggressively invest in things like incentives and trying to slow the share losses. Now that the process has begun for Uber, that’s likely to be a bit of an overhang until Uber’s listed.”
Shares of Lyft fell as much as 7.24 per cent on Monday, but have since trimmed losses to trade down 6 per cent at $56.28 midday in New York.
After an initial pop at its trading debut, shares have stalled under the IPO price of $72.
“We believe there could be continued pressure on LYFT shares while investors wait for Uber’s roadshow and dig further into the full financial metrics,” said Daniel Ives at Wedbush in a note on Friday. “In our opinion the battle for market share will be balanced going forward. We think there’s plenty of work to do and time to go until investors start to feel like they are missing out on the ‘next Amazon’ although we believe Lyft remains in a strong position to capitalize on this fertile market opportunity.”
Lyft has also been hit by considerable short selling interest, which analysts have said was adding to the pressure on Lyft.
Mr White said he still has a buy rating on the shares.
“I still view Lyft’s multiple as not unreasonable,” he said, referring to the company’s enterprise value to sales ratio. “That was a big reason we put a buy on the stock. Lyft is the one that is growing faster [in revenue compared with Uber] and gaining share in the US.”