Lyft plunges below its IPO price (LYFT)

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Lyft shares plunged 13% Monday, the company's first full day of trading after debuting on the Nasdaq.
The stock traded below its initial public offering price of $72 a share.
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Lyft plunged nearly 12% Monday in its first full trading session, closing at $69.01 a share, below its initial public offering price of $72. The company on Friday became the first ride-hailing company to hit the public market.

"Feels like just some of the faster money exiting the stock following the solid first-day pop," Tom White, an analyst at D.A. Davidson who has a "buy" rating on the stock, said in an email. "LYFT also caught a Neutral rated initiation today which probably isn't helping either."

On Monday, Guggenheim began covering Lyft with a "neutral" rating in part because of uncertainty surrounding the company's path to profitability and revenue-growth sustainability.

"We see four paths to profitability: cut driver pay, turn off incentives, reduce insurance costs or shift to self-driving cars," wrote Jake Fuller, an analyst at the firm. "The first two would be tough in a highly competitive category, the third might not be enough by itself and the fourth is likely 10 years out."

Lyft's initial public offering was oversubscribed, and shares opened for trading on Friday at $87.24 apiece, well above the $72 where they had priced the prior evening.

The debut, however, was ultimately something of a mixed bag. Though shares booked a 9% gain, they closed at session lows and turned negative in after-hours trading.

Other analysts are concerned about the risks surrounding the fledgling company. Lyft posted a $911 million loss last year, and faces stiff competition. Its rival Uber is expected to go public next month.

"While Lyft is purely a domestic vendor within the US, there remains some wild cards around the path of the company's autonomous vehicle ambitions, international expansion," as well as further market-share gains, Dan Ives, an analyst at Wedbush, wrote in a note to clients last week.

Of the seven Wall Street analysts covering Lyft shares, most are neutral. Five have a "hold" rating, and two say "buy." None recommend selling.

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