Lyft, the mobility company that doesn’t have a viable business model and has never made a profit, opened trading as a public company for the second business day on Monday and investors promptly dumped shares, lowering the company’s stock value below its IPO price of $72 per share. In the world of high finance, this is generally regarded as Bad Thing.
Analysts told CNBC that not only is this bad news for Lyft, but also for other tech companies looking to IPO this year, including the ride-hailing company’s rival, Uber, which is also known for not making any money. Here’s CNBC:
“Falling below its IPO price is a gut punch for investors and Lyft,” Wedbush managing director Dan Ives said in a statement to CNBC. “This is a pivotal few weeks of trading ahead to gauge Street demand for the name as valuation and profitability continue to be the wild cards for tech investors.”
Lyft revealed a 2018 loss of more than $900 million in regulatory filings ahead of its IPO. The stock carries “too many big assumptions” for success, according to analysts at Guggenheim.
Regardless of whether this portends trouble for the now-public company or a temporary correction to an over-hyped IPO, it’s worth remembering that Lyft lost more than $900 million last year and argued in court that if it has to pay drivers a minimum wage it will collapse their entire business model.
It’s almost like many tech companies exist in a sort of bubble! Who knew?
Correction, 3:27 PM: This article originally stated Lyft opened trading on Monday. It opened trading on Friday.