Technical Analysis of Financial Markets

Lyft Your Spirits

if you have paid any attention to financial media as of late, you’ve probably noticed the buzz around the Lyft IPO. The transportation network company went public back on March 29th and shares have struggled since. Here are a few headlines from different financial publications, all of which take the same negative tone:

Why Lyft Is the Worst Thing to Happen to the IPO Market – TheStreet

Lyft: A Bubble That Could End Worse Than Snap – Seeking Alpha

‘Treacherous,’ ‘crazy,’ ‘bad idea’: Experts sour on Lyft IPO –

All too often I have seen others seem to relish in the short term losses or hardships of others. Those who don’t own Lyft stock are seen saying things like, “Look at those idiots who lost all that money! Serves them right!”

Now let me show you something that might give you a new perspective. Let’s start with a chart of Lyft Stock since its IPO:

Pretty ugly right? I would agree. But even in the early going it is starting to look like that impulsive 5 wave down type of move. We have the first initial swift selloff, a slight rebound and another move lower. We might plan on another minor bounce before a final 5th wave down. Price action doesn’t look too much different than this yet to be named stock just after its IPO:

While the angles are different we can see similarities in that 5 wave move lower scenario. But what we can’t see yet in Lyft is how the stock will respond in the coming months. Sure it could continue cratering while we poke fun at the shareholders. Or, it could follow the path of my top gaining stock position in 2019, STNE which just happens to be that second chart above:

I heard the very same criticism of my STNE purchase at the time. “It’s on a Bee Line Lower.” Now I hear crickets as the stock has made me 112% in a few shorts months.

I don’t own Lyft and I wouldn’t until I could hedge my position via options. I also have no idea what is going to happen to the share price. This is just a courtesy reminder that your pessimistic nature is doing you no good in trading and investing, and I’d be willing to bet it isn’t doing much for you in everyday life either.

Trent J. Smalley, CMT