SINGAPORE (Apr 22): Investors who found some way to short the stock of Lyft, the No 2 ride-hailing player in the US, have had a great ride since its IPO three weeks ago. Lyft’s stock plunged to US$56.11 on April 15, down 22% from its IPO price, or 35% below its first trading day highs.
There is a sense of déjà vu for tech investors. In May 2012, the much-anticipated IPO of social media giant Facebook opened at US$38, went up as much as US$43, only to fall below US$18 just four months later, or as much as 52% below its IPO price. Facebook at the time was a loss-making firm in search of a business model, much like the ride-hailing companies around the world today.
Lyft’s poor debut as a listed company is seen as an indication that the public markets may be far less forgiving of Silicon Valley unicorns’ high valuations and non-existent profits than private investors have been so far. Indeed, Lyft’s precipitous slide in its initial weeks of trading is seen as an ominous sign for Uber, its larger global rival that is expected to list in early May.