FILE PHOTO: Lyft supporters gather for the Lyft IPO as the company lists its shares on the Nasdaq in the first-ever ride-hailing initial public offering, in Los Angeles, California, U.S., March 29, 2019. REUTERS/Mike Blake/File Photo
(Reuters) – Shares of recently listed Lyft Inc fell to a fresh low and closed the day down almost 11 percent on Wednesday on news that rival Uber Technologies Inc was close to filing its own initial public offering.
In ride-hailing company Lyft’s ninth day of trading its shares clocked their lowest closing price since going public on March 29. And the $60.12 close was 16.5 percent below Lyft’s final IPO price of $72 and even under the low end of its initial price target range of $62 to $68.
Reuters reported late Tuesday that rival Uber would seek to sell around $10 billion worth of stock in an IPO, and file the offering with regulators as soon as Thursday. Uber declined to comment for the report which cited unnamed people familiar with the matter.
“It’s not a coincidence that the day before Uber was expected to make a filing that investors are immediately contrasting it to Lyft and Lyft looks less attractive,” said Matt Moscardi, analyst at MSCI in Boston.
For example, heavy betting by short sellers against Lyft may be leaving investors anxious about Lyft’s valuation, Moscardi said.
It could also work in Uber’s favor that it is now expected to seek a valuation of $90 billion to $100 billion, below the $120 billion investment bankers previously told the company it could be worth, according to the Reuters report.
Uber may also have better name recognition, said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh. “It could be that people are anticipating the Uber IPO. When you go somewhere do you Lyft? Uber has become a verb.”
After the close of trading on Wednesday, Lyft announced that it would release financial results for its first fiscal quarter ended March 31 after the market closes on May 7.
Reporting By Sinéad Carew; Editing by Richard Chang