Only days into Lyft’s existence as a publicly traded company, Wall Street pessimists draw unwanted interest.
Traders who bet the stock will fall pile up into the company. These so-called short sales people borrow and sell the shares, in the hope of purchasing them back in the future at a lower price. One way to measure their interest in a stock is to examine the number of shares being lent and according to data provider IHS Markit, 9.2 million shares, or 662 million dollars in Lyft, have been lent on Wednesday.
That was equivalent to 28% of the trading shares, known as the float. By comparison, only 2% of Twitter’s floats and Snap’s were on loan at the same point after their initial public offering. This percentage was 8 percent for Facebook. Currently, Facebook and Twitter loan shares are less than 1% and nearly 9% of Snap shares. The percentage of the shares in the Lyft loan is roughly equal to the level of the electric car manufacturer Tesla whose managing director fought very publicly with short sellers accusing them of conspiring to bring down his company.
Lyft’s stock has stumbled since its public market debut on Friday. Shares closed on Wednesday at $72, equivalent to the I.P.O. price of Lyft and almost 18 per cent off their initial business. The performance of Lyft is not unusual. Facebook decreased over its first week offer price and Snap traded well below its first week opening price. However, the company debut was a test of investor appetite for rapidly growing but unprofitable technology companies.
Although Lyft’s revenue more than doubled last year, it lost almost $1bn, and several Wall Street analysts questioned whether it could keep track of its current growth path. The short sellers bet it can’t.