# Lyft Stock Plunges as Insiders Race to Dump Shares on Clueless Investors



## Driver-- (Mar 24, 2019)

very accurate.major hype and dumping

https://www.ccn.com/lyft-stock-plunges-as-insiders-race-to-dump-shares-on-clueless-investors
Lyft insiders saw the retail herd coming from a mile away, and now they're raking in the profits by dumping their shares on clueless buyers. | Source: Shutterstock
Lyft Stock Plunges as Insiders Race to Dump Shares on Clueless Investors
Tedra DeSue 01/04/2019 News, U.S. Business News

Lyft is getting crushed on the first trading day following its much-hyped IPO, and unsophisticated investors are learning the hard way that it's not a good idea to plow into companies as soon as they go public.
Lyft Stock Dives Below IPO Price While Dow, S&P 500 Surge

Lyft went public Friday at $72 a share. Almost immediately, the price rose 20% as retail buyers raced to gobble up shares, only to close well off its session high as insiders dumped their stakes.

lyft stock price chart

Lyft stock cratered on Monday, even as the S&P 500 and Dow surged by more than 1%. | Source: TradingView

When it opened for trading Monday, the price sank even further to $69.12 a share, which was more than 20% below its Friday intraday high of $88.60.

Even as the Dow climbed back above 26,000 Monday, Lyft was literally, not lifted higher. As of 3:11 pm ET, shares stood at $70.11 for a single-day plunge of 10.42%.
What's Going on With the Industry Darling?

Although Lyft started trading near $90 on Friday, those gains were wiped out over the course of the day as savvy investors took profits. Most believed that the ride-hailing company's shares would retreat, but now many are saying good grief!

The downward spiral of Lyft is partly the result of buyers' remorse. The regrets are leading to selling. Not knowing what you're getting into is leading to the demise of many unsuspecting investors.

For one, Lyft has a $25 billion valuation, which is questionable given its cost structure and losses. There's also the fact that its current U.S. ride-hailing market share is still less than half that of its rival Uber.
Insiders Race to Dump Shares on Clueless Investors
lyft stock nasdaq ipo

Retail investors should have steered clear of the Lyft IPO. | Source: Shutterstock

Retail investors are constantly warned to steer clear of IPOs, especially tech IPOs. Eager beavers ignored logic and jumped in head first in the company that hasn't turned a profit.

That worked out to be just fine for insiders. This is especially true for Lyft's investment bankers who are rewarded for riling up the unsophisticated investor. For Lyft, the bankers went all out pumping the IPO. Remember, they get paid tons of money for hyping IPOs. They must attract buyers.

Ken Fisher, the founder and executive chairman of Fisher Investments, told USA Today:

"So [investment bankers] whip up a mindless frenzy. The excitement and lure of magic returns suck in otherwise rational folks."

When the strong swoop in on the vulnerable, stocks often get clobbered. That's what we're seeing with Lyft.
Next Best Since Facebook? Yeah, Right!

Several red flags had been raised as warnings that this IPO wouldn't be all that it was being cracked up to be.

First, Lyft was the first ride-hailing company to go public, beating rival Uber to the punch. No one really knew how it would be received. Knowing this, sophisticated investors waited on the sidelines, while their clueless counterparts saw this as a buying opportunity.

Not-so-savvy investors also shrugged off the IPO price being boosted two days before the offering. Shares were initially set to price between $62 and $68. They were pumped to $70 to $72 Wednesday evening.

As pointed out by The Motley Fool:

"[That boost] gave way to higher pricing once it became clear that the institutional participants saw high demand for Lyft shares and were willing to pay up to get them."

CCN reported on how trading bots know there will be an offering of fragile retail positions buying, while some early investors cash out. Crowded longs leave a potentially explosive bearish situation if things start sliding.
Mom & Pop Investors Have to Learn the Hard Way

LYFT underwiters trying to get it back to $72&#8230;.. pic.twitter.com/FfWCcDR0wh

- NOD (@NOD008) April 1, 2019

The novelty of a company going public often means they are difficult to analyze. They've amassed little, to no, historical information. Newbies and uniformed shrugged this off, too.

Lesson learned, and hopefully many won't repeat it.


----------



## Woohaa (Jan 15, 2017)

_"Eager beavers ignored logic and jumped in head first in the company that hasn't turned a profit."_

Hope those buyers didn't use the baby's college funds. ??‍♂


----------



## No Prisoners (Mar 21, 2019)

Last week I spent couple of days with a British client whom I've known since my time at Merrill Lynch. He said that the EU been investigating Uber's labor practices concerning drivers. Investigators referring to similarities with Chinese labor practices. The report due later this year. It should create similar sanctions as with Google. Difference is that Google has huge cash reserves unlike uber.


----------



## Stevie The magic Unicorn (Apr 3, 2018)

My hope is that the labor laws finally catch up to uber.


I honestly and truly hope that the IC business model goes down in flames with uber/lyft. For 80 hour weeks it shouldn't be $700, it should be $800 in taxable pay plus another 650 in untaxed mileage reimbursement.


----------



## tohunt4me (Nov 23, 2015)

Woohaa said:


> _"Eager beavers ignored logic and jumped in head first in the company that hasn't turned a profit."_
> 
> Hope those buyers didn't use the baby's college funds. ??‍♂


Nope.

They used Retirement Investment funds.


----------



## mbd (Aug 27, 2018)

It is a thin float...they can easily bring it up 10% on some bs news..when shorting available, and it goes up to over 10% of the float( 2.5 million), watch out. It is San Francisco VC, Silicon Valley $$$$, they are all crooks.


----------



## tohunt4me (Nov 23, 2015)

Driver-- said:


> very accurate.major hype and dumping
> 
> https://www.ccn.com/lyft-stock-plunges-as-insiders-race-to-dump-shares-on-clueless-investors
> Lyft insiders saw the retail herd coming from a mile away, and now they're raking in the profits by dumping their shares on clueless buyers. | Source: Shutterstock
> ...


----------



## emdeplam (Jan 13, 2017)

Too many unicorns in the pipeline. Banksters will pump this turd once the insiders panic enough


----------



## tohunt4me (Nov 23, 2015)

Coming to an I.R.A. Fund near YOU Soon !


----------



## goneubering (Aug 17, 2017)

Price was $72.10 when I checked this morning. We’ll see what happens over the next year. I would consider buying at $5 per share but I don’t exoect it to drop that low.


----------



## Stevie The magic Unicorn (Apr 3, 2018)

emdeplam said:


> Too many unicorns in the pipeline. Banksters will pump this turd once the insiders panic enough












Did someone get her two week notice this afternoon?

Did Facepalm just call Lyft a turd of a company and infer that...

Lyft/uber arn't all sunshine and rainbows?


----------



## ANT 7 (Oct 14, 2018)

The plunge protection team of VC investors will be shuffling this hot potatoe around to each other at inflated prices, until the retail mooches have bought it all, then they'll walk away and KABOOM.


----------

