Today, the stock of Lyft Inc slumped by almost 11 percent to a record low after the ride-hailing firm posted a deep quarterly loss, placing pressure on Uber Technologies Inc as it prepares to price its initial public offering.
Last Tuesday, Lyft said that the company lost approximately $1.1 billion (£845.89 million) for the March quarter, even though analysts applauded its revenue growth. With the latest drop, the shares of Lyft are now down by 27 percent from their March 28 IPO price, giving the firm a market capitalisation of approximately $15 billion (£11.53 billion).
The sharp decline of Lyft since its Wall Street debut is expected to weigh on investors who are considering whether to buy shares of Uber, its larger rival which is slated to price its own IPO this coming Thursday.
Like Lyft, Uber is also unprofitable. A person who is familiar with the matter informed Reuters last Tuesday that it is willing to price conservatively within its stated range of $44 to $50 per share to avoid repeating the poor performance of Lyft since its IPO, which was aggressively priced at the top of its range.
Uber is considered as the largest ride-hailing firm in the world. It is aiming for a valuation of approximately $80.5 billion to $91.5 billion. That is as much as a third below what the insiders of the startup had hoped for last year.
Uber will need to convince its potential investors that the company is different from the Lyft, and that could include emphasising its international operations and Uber Eats food delivery service.
The loss of $48.53 per share of Lyft in the first quarter was mainly because of stock-based compensation and payroll tax that is related to its IPO. It forecasts that losses would peak this year, however, it did not disclose when it would make a profit.
According to Refinitiv data, the revenue of Lyft increased by 95 percent to $776 million, more than what analysts on average.