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After breaking below IPO price, Lyft's next challenge is short sellers

Lyft shares traded below their $72 IPO price for most of Monday, closing their second day of trading at $69.01 per share.

Data: FactSet; Chart: Chris Canipe

The big picture: As Axios' Dan Primack points out, it's unusual for such a large and well-publicized offering to cool so quickly, particularly without an intervening news event or material disclosure.

Lyft also may be in for further trouble. Short sellers have not been a part of the narrative so far, because shares are not settled and unavailable for stock lending programs. But that will change soon, notes S3 Partners' managing director of predictive analytics Ihor Dusaniwsky.

  • "Lyft stock is down [significantly] with minimal short side activity. We can expect further price weakness when the shorts are allowed to put the pedal to the metal and redline their trading strategies."
  • "When the Lyft IPO shares begin settling tomorrow and lending programs see their lendable inventories grow, over the next several days we should see a dramatic increase in stock lending, short sale approvals and Lyft short selling."

Go deeper: Lyft breaks below IPO price on second day of trading