Lyft stock a ‘sell’ on valuation concerns, Seaport Global says
Analyst says shares could drop to $42, or 42% below its IPO price
Lyft Inc. shares held well below its initial public offering price Tuesday, after an analyst made a bearish call on the stock and cast doubt on the idea that ride-hailing could replace car ownership with young consumers.$68.34 last, down $0.67 (-0.97%)
Michael Ward of Seaport Global Securities initiated coverage of Lyft LYFT, -0.96% with a sell rating, writing that Lyft’s current valuation bakes in “overly optimistic” assumptions about the transformational nature of ride hailing. He set a $42 price target on the shares, which is 42% below the initial public offering price of $72.
“In order to justify its current market valuation, investors need to take a big leap of faith that the millennials and later generations will forego ownership of a car and opt instead for reliance on a ridesharing service,” Ward wrote in a research note. “Despite the optics of vehicles being an underutilized asset, we believe people will continue to own their own vehicles as primary transportation and instead rely on the ridesharing services as a convenient supplement.”...MORE
Speaking of valuation, here's NYU's Aswath Damodaran with a lengthy analysis last month.
From Musings on Markets:
Lyft Off? The First Ride Sharing IPO!
