Shares of Lyft increased as much as 4 percent on Friday (April 5) after short-seller Citron Research recommended that investors hold on to the stock.
Lyft made its debut as a publicly traded company at the end of March, and saw shares slump in April 1 trading. But the number of active Lyft riders has grown fivefold to 18.6 million in the fourth quarter of 2018, from the first quarter of 2016, and those numbers are expected to grow, said Citron, which has held a stake in Lyft for the last two years.
The company also increased its position in Lyft in the open market.
“This is not a trendy video game or a GoPro camera ... this is a way of life that is saving people time and ensuring safety,” the note from Citron said, according to Reuters. “The entire rideshare market in the U.S. only accounts for 1 percent of miles traveled today … we have only just begun.”
While brokerage Seaport Global, which started coverage on Lyft with a “sell” rating earlier this week, is skeptical, Daiwa Capital Markets issued an “outperform” rating and a price target of $80 this week. That rating, according to Daiwa, is due to the potential of strong revenue growth for the company. It added that it expects losses to rise through 2020, before breaking even by the end of 2022.
Lyft set a record in terms of having the most losses in the year leading up to its IPO. For 2018, the company said in its IPO filing with the Securities and Exchange Commission (SEC) that it earned $2.16 billion, up from $1.06 billion in the prior 12-month period, but had a net loss of $911.3 million, up from the $688.3 million loss it logged in 2017. Lyft has had to spend heavily to compete against rival Uber and other ride-hailing companies as well as to expand.