Lyft (NASDAQ:LYFT) fell 5.5% at least partly as an analyst downplayed some recent takeover speculation around the ride-sharing firm.
Lyft (LYFT) shares jumped 17% on Sept. 8 amid some vague takeover speculation that was being promoted on social media. Lyft appeared to have gotten a boost after traders circulated a report at the time that speculated that the ridesharing firm may be a potential activist target due to its valuation.
“We expect LYFT valuation to see support at times from option value as the only pure-play US mobility asset, but also think recent speculation may be more hype than substance,” BofA analyst Michael McGovern wrote in a note earlier on Wednesday.
McGovern said media reports suggested that Amazon (AMZN), Alphabet (GOOGL), Argo, which is owned by Ford (F) and Volkswagen (OTCPK:VWAGY), and GM’s Cruise could be interested in Lyft, though he sees significant issues for each buyer. Amazon and Alphabet may face antitrust concerns and ridesharing may add another “regulatory battle” to scrutiny they are already receiving from regulators.
He added that GM (GM) and Ford (F) wouldn’t need a strategic acquisition to commercialize their autonomous vehicles, which they can do in house. BofA has an underperform rating and $14 price target on Lyft (LYFT).
McGovern also wrote that the current “capital constrained environment” also makes a Lyft (LYFT) acquisition less likely.
Following the Lyft speculation earlier this month, Loop analyst Rob Sanderson wrote that he saw the most logical acquirer of Lyft (LYFT) as GM and said that GM’s Cruise Automation unit has been vocal about its intention to provide robotaxi services.
Last Monday, GM’s Cruise preps for rideshare service launch, eyes $1B in revenue.