Lyft (LYFT, $70.00) may be failing to live up to the hype of its billion dollar IPO
Lyft’s shares fell for a second straight day, just days after it debuted on the stock market under the symbol LYFT. Analysts have expressed concern over the company’s valuation.
Analysts initiated coverage of the stock with a sell rating and a 12-month price target of $42 a share. This implies a 39.1% reduction from Monday’s close of $69.01. The company’s shares declined 4.2% before closing at $68.76, down by 0.1%. Its IPO as of last Thursday was priced at $72.
For these analysts, the main concern is Lyft’s valuation. They believe that the company may have gone overboard during its IPO last week, expecting that people would forego their own vehicles in favor of ride-hailing services. While such services would continue to remain a convenient option, it’s highly unlikely that these services would entirely replace personal vehicles. As a result, investors may need to take a leap of faith in order to justify the current market valuation of Lyft.
Lyft sees service transportation market worth $1.2 trillion in the U.S. But analysts think this is overestimation and the said market may be valued at around $70 billion.
The company now with its much hyped valuation at more than $22 billion posted a net loss of nearly $1 billion in 2018 and is yet to disclose strategy for a turnaround.
Some analysts also initiated coverage of Lyft’s stock with a neutral rating over lack of realistic assumptions to support the stock.
LYFT's Stochastic Oscillator sits in oversold zone for 6 days
The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an uptrend is expected.
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Notable companies
The most notable companies in this group are Microsoft Corp (NASDAQ:MSFT), Oracle Corp (NYSE:ORCL), Salesforce (NYSE:CRM), Adobe (NASDAQ:ADBE), Intuit (NASDAQ:INTU), Uber Technologies (NYSE:UBER), SERVICENOW (NYSE:NOW), Shopify (NYSE:SHOP), Palo Alto Networks (NASDAQ:PANW), CrowdStrike Holdings (NASDAQ:CRWD).
Industry description
Packaged software comprises multiple software programs bundled together and sold as a group. For example, Microsoft Office includes multiple applications such as Excel, Word, and PowerPoint. In some cases, buying a bundled product is cheaper than purchasing each item individually[s20] . Microsoft Corporation, Oracle Corp. and Adobe are some major American packaged software makers.
Market Cap
The average market capitalization across the Packaged Software Industry is 10.66B. The market cap for tickers in the group ranges from 291 to 3.15T. MSFT holds the highest valuation in this group at 3.15T. The lowest valued company is BLGI at 291.
High and low price notable news
The average weekly price growth across all stocks in the Packaged Software Industry was 2%. For the same Industry, the average monthly price growth was 4%, and the average quarterly price growth was 4%. CMAX experienced the highest price growth at 220%, while NXTT experienced the biggest fall at -64%.
Volume
The average weekly volume growth across all stocks in the Packaged Software Industry was -6%. For the same stocks of the Industry, the average monthly volume growth was 10% and the average quarterly volume growth was 20%
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
Valuation Rating: 52
P/E Growth Rating: 74
Price Growth Rating: 58
SMR Rating: 82
Profit Risk Rating: 89
Seasonality Score: 0 (-100 ... +100)