Lyft Stock’s Recent Bounce Could be Short-Lived

The equity is fresh off an all-time low

Aug 11, 2022 at 11:20 AM
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This commentary first appeared on Forbes Great Speculations, where Schaeffer's Investment Research is a regular contributor.

Rideshare concern Lyft Inc (NASDAQ:LYFT) is underperforming on the charts, sporting a nearly 55% year-to-date deficit. Following a massive post-earnings bear gap in May, the shares hit an all-time low of $11.93 on July 13. And though the company’s most recent earnings report has helped LYFT cover some lost ground, a study from Schaeffer’s Senior Quantitative Analyst Rocky White shows the stock just ran into a trendline that has been a bearish indicator in the past.

According to White’s study, LYFT is within one standard deviation of its 80-day moving average for the sixth time in the last three years. After the last five signals, the equity was lower one month later 80% of the time, averaging a 10.5% loss for that period. A comparable move from the stock’s current perch of $19.32 would place it just above the $17 mark.

LYFT Chart August 10

Of the 25 analysts in coverage, 15 carry a “strong buy” rating on Lyft stock, while 10 say “hold.” Meanwhile, the 12-month consensus price target of $33.87 is a whopping 74% premium to current levels, leaving plenty of room for price-target cuts and/or downgrades in the future.

An unwinding of optimism amongst short-term options traders could also have bearish implications. This is per LYFT's Schaeffer's put/call open interest ratio (SOIR) of 0.67 that ranks higher than just 17% of readings in its annual range, which implies these traders are operating with a call-bias.

Meanwhile, Lyft stock is sporting relatively cheap options at the moment. This is per the equity’s Schaeffer’s Volatility Index (SVI) of 67%, which ranks in the relatively low 33rd percentile of readings from the past year.


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