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Lyft was sliding Friday morning, down as much as 9%, as ride-hailing rival Uber gets set for its stock-market debut.
Uber on Thursday evening priced its initial public offering at $54 a share, giving it a valuation of $75.5 billion. That’s well below the $120 billion valuation that Wall Street banks were floating in October.
Uber’s lowered valuation comes after Lyft has experienced a brutal six weeks as a publicly traded company. Shares priced at $72, but put in a record low of $52.78 on Wednesday after the company’s underwhelming first-quarter results. The sell-off in Lyft’s stock has been accompanied by looming worries about competition from Uber and the company’s uncertain path to profitability.
Susquehanna analyst Shyam Patil, in a recent note to clients, said he’s worried about “the competitive dynamics of being the #2 player in a market where scale is extremely important, and switching costs for riders and drivers are relatively low and barriers to entry — while they exist — aren’t insurmountable, especially for larger-scaled US and international Internet companies.”
There are also questions surrounding Lyft’s path to profitability. The company has lost more than $3 billion, including more than $900 million last year. Its adjusted net loss in Q1 was $228.4 million, up from $211.5 million in the fourth quarter of last year.
Still, Wall Street thinks that’ll likely work itself out over time. “Our bull thesis is driven by the company’s significant market opportunity, its history of innovation, and its path to profitability as the business scales,” JPMorgan analysts led by Doug Anmuth, who have an $82 price target, wrote in a recent report.
Of the analysts surveyed by Bloomberg, 16 say “buy,” seven suggest “hold,” and just two recommend “sell.” They have an average price target of $73 a share.