That didn’t take long. On its second day of trading, Lyft stock plunged through its $72 a share IPO price to as low as $67.85, before closing at $69.01. (And in after-hours trading, it traded mostly lower than its closing price.)
The sell-off created a mystery on Wall Street. With nearly all the pre-IPO investors restricted by lock-up agreements from selling for six months, the shares available for trading were largely the 32.5 million bloc the company sold in the IPO. While it’s understandable that the buyers of those shares would have offloaded them for a quick gain when the stock was trading above $72—on Friday, the stock got up to $86 or so—it makes no sense when the stock is below the IPO price. Yet selling pressure continued. The only logical answer is that short-selling has already begun by investors betting that the price will fall further in the next few months. Lyft’s honeymoon on Wall Street may turn out to be extremely short-lived.