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Seaport Global Starts Lyft With A Sell: 'A Big Leap Of Faith'

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Seaport Global Starts Lyft With A Sell: 'A Big Leap Of Faith'

Seaport Global is bearish on newly public ride-hailing service Lyft Inc. (NASDAQ: LYFT), expressing doubts that the nation will move completely away from personal cars to using app-based ride companies.

The Analyst

Seaport Global's Michael Ward initiated coverage on Lyft with a Sell rating and $42 price target.

The Thesis

Valuation for the new stock is tough because the company is already a well-known brand, but its business model relies on an ongoing societal change that may or may not continue, Ward said in the Tuesday initiation note. 

“Investors need to take a big leap of faith that the millennials and later generations will forgo ownership of a car and opt instead for reliance on a ridesharing service,” the analyst said, adding that Seaport Global thinks people will use ride-hailing primarily as a supplement to personal car use.

The sell-side firm does believe the ride-hailing market will continue to grow, with Lyft a "prime competitor."  Yet “current valuations reflect an overly optimistic view of consumer behavior in the U.S.," Ward said. 

Lyft's revenue has grown from $343 million in 2016 to $2.1 billion in 2018, the analyst said, adding that he expects the company to hit $5.5 billion in revenue by 2021.

Price Action

Lyft shares were down 3.64 percent at $66.50 at the time of publication Tuesday. 

Related Links:

Wedbush Says 'Too Early To Be Over-Reactive' With Lyft

Lyft Rockets Onto Public Markets With $2.3B Raise

Photo courtesy of Lyft. 

Latest Ratings for LYFT

DateFirmActionFromTo
Jun 2019Initiates Coverage OnOutperform
Jun 2019UpgradesNeutralPositive
Jun 2019Initiates Coverage OnHold

View More Analyst Ratings for LYFT
View the Latest Analyst Ratings

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