Lots of Tears, Little Joy
Investment bankers got greedy with the Lyft IPO, the most hyped technology IPO so far in 2019, when they raised the debut price to $72/share from the original range $62-68/share. The first trade was $88/share (14 times Price/Sales), the stock has been effectively in decline since that trade.
Lyft Price Chart Since IPO
This is not a good kickoff for IPOs in 2019, the post-IPO price action on Lyft is reminiscent of Snap — ugly.
Jim Cramer took it hard emotionally, saddened by the blowback he was getting for his frothy bullishness, threatening to “go away from Twitter”.
Honestly, i now have to go away from Twitter for a bit because i see if you make a mistake–thinking Lyft would hold-and admit you made a mistake it is worse than if you say you didn't…I don't have time for that and won't opine again on this kind of deal
— Jim Cramer (@jimcramer) April 2, 2019
Looking Forward – Lyft Trading
Grizzle made it clear in our comprehensive deep dive that long-term the economics of Lyft were challenged. We viewed this as a short-term trade at best. We don’t see an opportunity right now to leg into a near-term trade on Lyft, IPOs are driven primarily by psychology given the very limited price history – and this has been a big fumble out the gate.
There are more headwinds than tailwinds for Lyft, we’ll have Uber information coming out shortly and investor attention will shift accordingly. Investors still holding from the IPO are definitely closer to exiting or reducing their positions than doubling down.
Upcoming Technology IPO Slate
2019 is a big year for technology IPOs. We’ve got Pinterest, Uber, Slack, and Zoom all coming down the pipe.
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