Published: Tue, April 02, 2019
Markets | By Otis Pena

Rakuten books JPY 110 billion gain from Lyft IPO

Rakuten books JPY 110 billion gain from Lyft IPO

The stock price of the ride-hailing service dropped almost 12 percent, closing out the day below its initial public offering price of $72 a share last week. It took Snap Inc. four months to dip beneath its 2017 IPO price, and at $11.36 on Monday it's still below that the $17 a share offer price.

Analysts are releasing their ratings of Lyft's shares, amplifying doubts about the money-losing San Francisco company that's facing challenges galore. After pricing at $38 a share, Facebook shares rose as much as 18 percent before fading and leaving underwriters to frantically defend the IPO price into the close of that first day, which like Lyft's was a Friday.

Ride hailing companies like Lyft have become more prominent throughout the last few years. Uber lost $1.8 billion in 2018.

Tradeweb Markets has been around for two decades already and during that time the company has been operating with online market places for various audiences, offering over 40 products with reporting 549 billion dollars of trading volume for their products during 2018.

Before going further, a short lesson on how the IPO market works. The stock's downward trend suggests that investors are having buyer's remorse amid a "stampede" of hot closely held companies flooding markets with newly liquid shares. It's not like Lyft is a bad company, it's that the road to profits is several years away at best.

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Lyft's net loss climbed to $911 million in 2018, which is more than any other USA startup has lost in the year prior to its IPO.

"Falling below its IPO price is a gut punch for investors and Lyft", Wedbush's managing director, Dan Ives, told CNBC. These are high-growth companies, with even higher propensities to burn through capital, and they're built around compelling narratives of world-altering potential.

A Lyft spokeswoman didn't return a request to make either of Lyft's co-founders Logan Green or John Zimmer available for an interview.

Why has Lyft stock fallen?

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