3 Reasons Why Lift Stock Fall 20% Last Week – The Motley Fool

Lift (NASDAQ: LIFT) was one of last week's biggest losers. Shares in the nation's second-most popular sharing service declined 19.5%, a rough road to just their second full week market.

The week started on a sour note. Reports discovered that Lyft threatens to sue Morgan Stanley and accuses the investment giant of marketing short selling industries to former Lyft investors who fail to sell their shares due to lock restrictions. HSBC followed later in the week, starting coverage with a neutral stock, despite the fact that the stock already traded below the $ 72 initial public offer price. The final dagger came when industry-leading Uber filed its last economy in front of its own upcoming IPO.

Image source: Lift.

Short people

There has been a lot of short circuit on Lyft. When a company hits the market with a valuation north of $ 20 billion – at about 10 times subsequent revenue and having posted a gigantic deficit of over $ 911 million last year – it's going to be inviting to Naysayers.

No one is going to stop anyone from betting on a stock that he or she feels is overvalued, but Lyft's shot at Morgan Stanley is that it helps their pre-investors to bypass locks by letting them cut the stocks now to unlock their previous winnings. Morgan Stanley denies the allegations, but we have to see how it plays. It's just a bad look for a company during its second week's deal to point your finger to someone in the insurance industry.

Wall Street is lukewarm.

We have not yet seen Lyft's IPO guarantors at the check-in with their official grades in the warehouse, but the latest features of the Wall Street pros with less bias have not been kind. Masha Kahn at HSBC initiated coverage of Lyft with a holding position and a prize of $ 60 on Wednesday. Kahn believes that pricing must fall dramatically for ride-hailing services to take over most transportation needs, and that is a bad sign that Uber and Lyft are losing so much money even at today's travel prices.

Kahn is also concerned that distant silver medals scale at a lower margin as market leaders, and Lift is certainly well behind Uber at this point. She believes Lyft deserves to be priced at a discount to Uber.

Here comes Uber

The last part of last week's pessimistic news trio was Uber giving investors a closer look at the economy. Uber's S-1 filing on Thursday confirmed how great it is in relation to Lift. It can grow slower – revenue increased 42% in 2018 while Lyft's top line more than doubled – but Uber also generates more than five times as much income. The company recorded nearly $ 11.3 billion on the top line. Not surprisingly, Uber also has five times as many users. Did you know that Morgan Stanley is the lead author of Uber's offer?

However, Uber's bottom line is also problematic. The company's operating loss increased by $ 3 billion, and there is hope that Lyft will turn the corner anytime soon. If Uber is struggling to win profits with a more diversified model and bigger sales, we can never get to the point where the shipping industry comes out of the red. The deep dive in Uber's business shows that the industry will be challenging for even the market leader. Lift will struggle even if it manages to recover from Uber's rearview mirror.