Lyft share price falls 11% after notable IPO debut
The ridesharing app's stock has fallen after a spectacular start on Wall Street.
Lyft share price is down after an impressive debut on Wall Street last week. After launching with a stock price of $87, the rideshare app has now fallen to $70 a share.
Why has Lyft stock fallen?
Lyft’s initial public offering( IPO) dropped after a much-hyped start in the US stock market. The ridesharing company was the first of highly anticipated 2019 IPO’s. However, after its launch, the corporation’s stock fell because of investors having second thoughts about buying the stock. The company is also facing bad publicity after ridesharing drivers went on strike for higher pay in Los Angeles after the IPO launched. In addition to those issues, the advent of self-driving cars from Google could cause more uncertainty for the ridesharing app.
Lyft’s IPO is also declining because the company hasn’t been profitable yet. Though the ridesharing app made $2.2 billion in revenue in 2018,the corporation also had $911 million in losses as well.
What does Lyft’s IPO decline mean for other unicorn IPO’s?
Lyft’s stock underperformance after being valued at $24 billion could be unfortunate signs for other unicorn IPO’s valued at over $1 billion. Tom White, analyst at D.A. Davidson, said that the excitement of Lyft’s stock fell after the first day of trading. The stock has also been rated as neutral amid lukewarm Wall Street expectations.
‘Feels like just some of the faster money exiting the stock following the solid first-day pop. LYFT also caught a Neutral rated initiation today which probably isn’t helping either,’ said White.
While Lyft's IPO is struggling, investors will be watching its rival Uber when it goes public later this year to see if tech startups can succeed on Wall Street before turning a profit.
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