Lyft Extends Plunge Ahead of Uber IPO

 

 

Chart of Lyft Inc. (LYFT) – Lyft Extends Plunge Ahead of Uber IPO – Source: TheTechnicals.com and TradingView

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, scheduled for Thursday. This 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.