The Uber initial public offering is the biggest payday in Wall Street history, with the taxi-hailing company looking for a valuation of around $90 billion, but the poor performance of rival Lyft has cast a dark cloud over the whole thing. Lyft is a much smaller rival of Uber, but it remains the first taxi-hailing service to have actually listed in the stock market and needless to say, its overall performance is certainly going to be an indicator of the direction that the industry is going to take in the near term. Lyft had its IPO in March, and after an excellent opening, the stock slumped on the second day. Since then, it has been an uphill struggle for the stock and it never again reached its IPO price.
However, the troubling numbers from the latest quarterly results have made it harder for investors to hold on to the stock and yesterday, Lyft shares reached historic lows. In the latest quarterly results, Lyft revealed that it had made losses to the tune of a staggering $1.1 billion and even though the company’s revenues grew handsomely, the selloff in the stock market continued. The stock dived to record lows and is currently trading at a price that is 27% below its price on listing day.
However, there is something larger at play, because Lyft was the first such service to have been listed and so far its performance on the stock market has been nothing but abysmal. In such a situation, investors will be thinking twice before buying Uber stock, which is going to have its IPO today. Lyft has never turned a profit, and like Uber, the company had informed investors that the company never actually turn a profit.
However, there is a slight difference between the two IPOs. Uber has priced its shares in the price band of $44 to $50 and according to most analysts that is a cautious listing price that should not be frowned upon by conservative investors. Lyft, on the other hand, priced its shares in a very aggressive manner and that seems to have backfired on the company. In addition to that, Uber has already sold $500 million worth of shares to payments giant PayPal at the IPO price, and that is perhaps a big sign of confidence for the California based company’s IPO.
Leave a Reply