Lyft shares nosedive on day 2 of trading

Date: 2nd April 2019

On Monday, shares of Lyft dropped about 12 per cent. This decrease in price went below the initial public offering price of the company.

Lyft shares experienced a peak price of $88.60 on Friday after which on Monday the price went down to just $69.01. Due to this decline, about 41 million shares were sold off in the stock market on Monday.

Just before its initial public offering, the company announced its losses in 2018 of over $900 million. This might be a reason for the wild fluctuations of the share price.

Other companies like Lyft’s rival Uber, Slack and Pinterest are also planning to issue shares for the first time to the public. However, this incident with Lyft may dampen their hopes. Pinterest reported a loss of $62 million for the year 2018. On the other hand, Uber and Slack have not published their financial records.

Various tech companies have not seen light in terms of profits for quite a while in the global markets, like the ones mentioned above. An exception to that is Zoom, a video-conferencing company, reported profits while it issued its shares for the first time. This makes it one of the rare tech companies to have impressive financials.

While many analysts show positive expectations for the shares of Lyft as compared to Uber, there are various downsides for the company, including its losses in recent years, which makes it a tricky investment. Today many of the initial investors of the company dumped the shares of the company, which is another red flag for its stock market image.