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Lyft is luring investors, just not the kind it wants
[NEW YORK] Lyft, just days into its existence as a publicly traded company, is drawing unwanted interest from Wall Street's pessimists.
Traders who bet that the stock will decline are piling into the ride-sharing company. These short-sellers borrow and sell the shares, hoping to buy them back at a lower price sometime in the future.
One way to gauge their interest in a stock is to look at the number of shares that are being lent, and as at Wednesday, 9.2 million shares, or US$662 million worth of Lyft, were on loan, according to the data provider IHS Markit. That was equal to 28 per cent of the shares actually available for trading, known as the float.
By comparison, just 2 per cent of Twitter's float, and a similar amount of Snap's, was on loan at the same point after their initial public offerings. For Facebook, that percentage was 8 per cent.
Currently, the shares on loan from Facebook and Twitter total fewer than 1 per cent, and at Snap they're nearly 9 per cent.
The percentage of shares on loan at Lyft is roughly equal to the level at Tesla, the electric-car maker, whose chief executive has waged a very public fight with short-sellers, accusing them of conspiring to bring down his company.
Since making its public market debut Friday, Lyft's stock has stumbled. Shares closed on Wednesday at US$72, equal to Lyft's IPO (initial public offering) price and off nearly 18 per cent from their opening trade.
Lyft's performance is not unusual. Facebook fell below its offer price during its first week, and Snap traded well below its opening price in its first week.
But the company's debut was a test of investor appetite for fast-growing but unprofitable tech companies. While Lyft's revenue more than doubled last year, it lost nearly US$1 billion, and a number of Wall Street analysts have questioned whether it can maintain its current growth trajectory.
The short-sellers are betting it can't.