Lyft is lur­ing plenty of in­vestors, but they’re not the kind it wants

The Buffalo News - - BUSINESS NEWS - By Stephen Grocer NEW YORK TIMES

Lyft, just days into its ex­is­tence as a pub­licly traded com­pany, is draw­ing un­wanted in­ter­est from Wall Street’s pes­simists.

Traders who bet that the stock will de­cline are pil­ing into the ride-hail­ing com­pany. These short-sell­ers bor­row and sell the shares, hop­ing to buy them back at a lower price some­time in the fu­ture.

One way to gauge their in­ter­est in a stock is to look at the num­ber of shares that are being lent, and as of Tues­day, 6.6 mil­lion shares, or $455 mil­lion worth of Lyft, were on loan, ac­cord­ing to the data provider IHS Markit. That was equal to 20 per­cent of the shares ac­tu­ally avail­able for trad­ing, known as the float.

By com­par­i­son, just 2 per­cent of Twit­ter’s float, and a sim­i­lar amount of Snap’s, was on loan at the same point af­ter their ini­tial pub­lic of­fer­ings. For Face­book, that per­cent­age was 5 per­cent.

Cur­rently, the shares on loan from Face­book and Twit­ter to­tal fewer than 1 per­cent, and at Snap they’re nearly 9 per­cent.

The per­cent­age of shares on loan at Lyft is roughly equal to the level at Tesla, the elec­tric­car maker, whose chief ex­ec­u­tive has waged a very pub­lic fight with short-sell­ers, ac­cus­ing them of con­spir­ing to bring down his com­pany.

Since making its pub­lic mar­ket de­but Fri­day, Lyft’s stock has stum­bled. Shares on Wed­nes­day were trad­ing at just un­der Lyft’s IPO price of $72 and off about 20 per­cent from their open­ing trade.

Lyft’s per­for­mance is not un­usual. Face­book fell be­low its of­fer price dur­ing its first week, and Snap traded well be­low its open­ing price in its first week.

But Lyft’s de­but was a test of in­vestor ap­petite for fast-growing but un­prof­itable tech com­pa­nies. While Lyft’s rev­enue more than dou­bled last year, it lost nearly $1 bil­lion, and a num­ber of Wall Street an­a­lysts have ques­tioned whether it can main­tain its cur­rent growth tra­jec­tory. The short-sell­ers are bet­ting it can’t.

New York Times

Lyft co-founders John Zim­mer, cen­ter left, and Lo­gan Green, cen­ter right, cheer at the com­pany’s IPO party on March 29.

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