One of my favorite things to do on Twitter is to run a poll on herd mentality. Since the vast majority of my followers are finance related, I like to use my audience as a test group; a science experiment if you will.
Unless you’ve been living in a cave, you’ve probably noticed that Lyft, the ridesharing company and Uber’s biggest rival, went public last Friday. The stock has been down all three days that it’s been a public company. The IPO price was listed at $72. The first day of trading it peaked at $88.60 but closed $10 off the highs near $78.
As of this writing the peak to trough drawdown was 26%. That’s a pretty big down move for an IPO that was reportedly 20x oversubscribed. It even entered a bear market the 2nd day of trading.
Everyone on my Twitter stream appeared to be paper short the company so I decided to run some polls yesterday to get a sentiment heat check.
Here are the results: 4 to 1 think it will hit $50 this year and 4 to 1 think it will not hit $100 this year.
I view my followers as the typical retail homegamer. So when I see trends like this I typically bet against the herd. This is another thing I’ve learned from all of the behavioral finance books I’ve read this year. I cast a pretty wide net here and there are obviously no guarantees that it will hit either $50 or $100. It’s pretty clear that everyone is currently in System 1 thinking because of how the first few days of being a publicly traded company have fared for Lyft. Pun intended.
A useful tool would be if I could set a conditional alert on Twitter to remind me to circle back to this specific tweet whenever Lyft hits either $50 or $100. Twitter, if you are reading this, please reach out to me and we can implement this together.
Good luck to all the Lyft bagholders out there.