Lyft Shares Fall After Booming IPO2
It hasn’t been a successful first week for trading Lyft shares following a booming initial public offering this past Friday. Following the IPO’s purchase price of $72 per share, the stock peaked $87 per share on Friday. This past Monday, shares dipped under $69 briefly before stabilizing around the same dollar amount. At the time of this writing, shares are down around $17.
The poor start to the first week of trading so far equates to a valuation of about $19.8 billion. The IPO share prices pegged the ride-sharing company’s value around $24.3 billion. It underscores the trouble companies like Lyft will likely experience as the firm remains unprofitable to this day. The original report also points out that cost-cutting or raising ride prices will likely be difficult in such a price-conscious segment.
Other analysts believe Lyft’s profitability picture is far in the distance and could be a tough sell for investors. The company has placed major bets on self-driving cars, bicycles, and scooters. Autonomous vehicles remain the big bet as the company pours capital into the sector. Yet, it will likely be years before any self-driving car is ready for prime time.
For GM, it’s not great news. The automaker made a $500 million investment in Lyft years ago, and the dip in share prices slashes some of the profits it could make should it decide to simply sell its shares. Experts are split over what GM should do with its investment. It could cash it out as soon as possible for a return, or hang onto the shares and potentially maximize its investment further.
Another wildcard factor is Uber. The rival ride-sharing service to Lyft is also preparing for its own IPO, which could ignite a race toward profitability. In that case, it would be good news for investors.
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If you Google ‘Lyft’s biggest investors’, GM comes in 2nd @ $1.46b (Fidelity’s 3rd @ $1.45).
So either the Goog postings are wrong, or GM sold off $1b after the IPO was up 8.7% on open. Or whatever.
So the initial GM investment of $500 million in Lyft has more than doubled in less than 4 years. Good work GM. I am optimistic the Lyft investment will continue to be sound.