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.
Seaport Global's Michael Ward initiated coverage on Lyft with a Sell rating and $42 price target.
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.
Lyft shares were down 3.64 percent at $66.50 at the time of publication Tuesday.
Photo courtesy of Lyft.
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