Lyft shares hit new low amid Uber IPO chatter

April 11, 2019 08:59
Lyft will release its financial results for the first fiscal quarter ended March 31 after the market closes on May 7. Photo: AFP

Shares of recently listed Lyft Inc fell to a fresh low and closed down almost 11 percent on Wednesday on news that rival Uber Technologies Inc was close to filing its own initial public offering, Reuters reports.

On their ninth day of trading, the ride-hailing company's shares clocked their lowest closing price since going public on March 29. And the US$60.12 close was 16.5 percent below Lyft’s final IPO price of US$72 and even under the low end of its initial price target range of US$62 to US$68.

Reuters reported late on Tuesday that rival Uber would seek to sell around US$10 billion worth of stock in an IPO, and file the offering with regulators as soon as Thursday. Uber declined to comment on the report which cited unnamed people familiar with the matter.

“It’s not a coincidence that the day before Uber was expected to make a filing that investors are immediately contrasting it to Lyft and Lyft looks less attractive,” said Matt Moscardi, analyst at MSCI in Boston.

For example, heavy betting by short sellers against Lyft may be leaving investors anxious about Lyft’s valuation, Moscardi said.

It could also work in Uber’s favor that it is now expected to seek a valuation of US$90 billion to US$100 billion, below the US$120 billion investment bankers previously told the company it could be worth, according to the Reuters report.

Uber may also have better name recognition, said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh. “It could be that people are anticipating the Uber IPO. When you go somewhere do you Lyft? Uber has become a verb.”

After the close of trading on Wednesday, Lyft announced that it would release financial results for its first fiscal quarter ended March 31 after the market closes on May 7.

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