LYFT Share CFDs guide: How to Trade on Lyft’s Share Price

Lyft, Inc., a prominent American rideshare provider, could be the next addition to your CFD trading portfolio. Read on to learn about this firm's history, trading dynamics, and ways to trade its shares:

TL;DR

• Company Overview: Lyft, Inc. is an American mobility services company offering ride-hailing, bike-sharing, vehicle rentals, and food delivery in the U.S. and some Canadian cities.
• Stock Performance: Lyft's share price has fluctuated significantly since its 2019 IPO, affected by market trends, economic conditions, and internal restructuring efforts.
• Trading Options: Investors can trade Lyft shares directly via centralised exchanges or speculate on their price movements using Contracts for Difference (CFDs).
• Factors Impacting Share Price: Key factors influencing Lyft's share price include financial performance, industry growth, competition, strategic initiatives, and macroeconomic trends.

What Is Lyft?

Lyft, Inc. (LYFT) is an American company specialising in various mobility services such as ride-hailing, vehicle rentals, bike-sharing, motorised scooters, and food delivery in the United States and certain cities in Canada. As the second-largest ridesharing company in the US after Uber as of 2024, Lyft determines fares using a dynamic pricing model that varies according to local supply and demand. It earns a commission from each ride booked.

Launched in 2012 by Logan Green and John Zimmer as an extension of their earlier venture, Zimride, a carpooling service for long-distance travel, Lyft soon transitioned into a dedicated ridesharing platform. Lyft expanded its operations by acquiring the Motivate bike-sharing network in 2018 and forming partnerships in the healthcare sector.

Despite its growth, Lyft has faced criticism for its use of independent contractors as drivers, a practice that has led to legal disputes regarding the lack of worker protections. The company has also been criticised for its impact on traffic congestion in urban areas.

Lyft's Share Price History

Lyft's share price has experienced significant fluctuations since its initial public offering (IPO) in March 2019, reflecting broader market trends and key financial events. The stock began trading at around $74.90 but soon declined to $57.62 by May 2019 due to investor concerns over profitability and increased competition from rivals like Uber (UBER).

During the COVID-19 pandemic in early 2020, Lyft's share price fell sharply, dropping from $38.49 to $26.85 between February and March, as lockdowns and reduced travel demand hit the ridesharing industry hard. However, the stock rebounded to $49.13 by December 2020 as markets anticipated economic recovery and vaccine rollouts.

From 2021 to 2023, Lyft's stock remained volatile, influenced by global economic uncertainty, rising inflation, and regulatory scrutiny over the gig economy. In 2024, the share price continued to experience ups and downs amid operational restructuring, layoffs, and persistent challenges in achieving profitability amidst competitive pressures and macroeconomic headwinds. Between March and September of 2024, Lyft shares lost 44% of their value.

How Are Lyft Shares Traded?

Investors interested in trading Lyft shares can do so directly through a centralised exchange like the Nasdaq (US-TECH 100). Alternatively, they can gain exposure to Lyft's share price movements without actually owning the shares by trading CFDs.

CFDs enable traders to speculate on the rise or fall of Lyft's share price without buying the actual shares. Traders can take long or short positions based on their predictions about the stock's performance, allowing them to potentially benefit or incur loss from price fluctuations without needing a traditional brokerage account (based on their position and the direction of the market).

A key feature of CFD trading is the use of leverage, which can magnify profits but also increase the risk of substantial losses in tandem. Therefore, traders aiming to gain exposure to Lyft's share price via CFDs should thoroughly understand market conditions and implement effective risk management strategies, recognising they do not hold the rights or responsibilities of actual shareholders.

Factors Affecting Lyft's Share Price

Understanding the factors that shape Lyft's share price is crucial, as they impact the dynamics of share CFD trading even though CFD traders do not own the underlying stock. Here are some key factors that may affect Lyft's share price:

• Financial Reports: Market sentiment may be affected by Lyft's periodic revenue releases. Investors and analysts look at how the firm's results compare to expectations and specific data such as earnings per share (EPS) and cash flow figures. These financial metrics may increase investor confidence and drive a price surge if the overall report is positive, with the opposite outcome possible when Lyft's quarterly earnings report is gloomier.
• Industry Outlook and Growth in the Gig Economy: Lyft is positioned in a relatively new economic sector, and the ride-sharing industry benefits from the expanding gig economy and changing job structure in many countries. As flexible work arrangements gain popularity, demand for ride-sharing services like Lyft continues to grow, contributing to a favourable outlook for the company, according to some analysts. However, stock shocks that occurred during the pandemic may occur again in the future, making Lyft's longer-term prospects far from certain.
• Strategic Initiatives & Competition: Lyft's strategic moves, such as the introduction of the Price Lock feature, are designed to enhance customer loyalty and growth. With competition from other firms in the industry like Uber posing consistent challenges, CFD traders may wish to keep track of Lyft's strategic shifts in order to keep a better handle on how the company's position and share price may change.

Lyft Share Price Analysis

As with understanding the factors that impact Lyft's share price dynamics, learning how to analyse the underlying share price is an important part of informed CFD trading, although positive results are never guaranteed and past performance is not an indicator of future results. Let's take a more detailed look at how to perform fundamental, technical, and sentiment analysis of Lyft's share price:

Fundamental Analysis of Lyft's Share Price in CFD Trading

To effectively analyse the fundamental aspects of Lyft's shares for CFD trading, consider the following:

• Financial Health and Performance: Review Lyft's financial statements, including the income statement, balance sheet, and cash flow statement. Focus on key metrics such as earnings per share (EPS), profit margins, return on assets (ROA), and return on equity (ROE) to gauge the company's profitability and operational efficiency.
• Valuation Metrics and Comparisons: Examine Lyft's valuation ratios and compare them with its major ride-sharing industry competitors. This analysis helps determine whether Lyft's shares are overvalued or undervalued relative to peers.
• Market Capitalisation and Share Structure: Evaluate the number of outstanding shares to understand market capitalisation and potential dilution risk. A larger number of shares can indicate a broader investor base but may also suggest possible dilution.
• Impact of Macroeconomic and Industry Trends: Assess the effects of broader economic conditions and consumer spending, and specific industry trends, such as growth in the gig economy and regulatory changes, on Lyft's overall performance and future prospects.

Technical Analysis of Lyft Shares

To perform a comprehensive technical analysis of Lyft shares, focus on these key elements:

• Trend/Pattern Recognition: Analyse historical price trends and patterns to identify potential future price movements. Understanding common chart patterns may provide insights into market behaviour.
• Volume and Momentum Indicators: Examine trading volumes to gauge market sentiment and the strength of price trends. Use indicators like the Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) to assess momentum and identify potential entry or exit points.
• Support, Resistance, and Moving Averages: Identify key support and resistance levels from past price actions to set risk management tools such as stop-loss orders and profit targets. Use simple and exponential moving averages (SMA and EMA) to smooth out price data and detect potential bullish or bearish trends.

Sentiment Analysis of Lyft Shares

For sentiment analysis of Lyft shares, consider the following factors:

• News' Market Impact: Monitor news events, such as strategic partnerships, leadership changes, and regulatory updates, which may affect investor confidence and influence stock price movements rapidly.
• Macroeconomic Indicators: Stay updated on broader economic data, like GDP growth and inflation figures, which can shape overall market sentiment towards Lyft and its stock performance.
• Traders' Psychology: Be aware of market psychology, where emotions such as fear or greed can drive large-scale buying or selling behaviour, affecting Lyft's share price volatility.

How to Start Trading on Lyft Share CFDs with Plus500

• Step 1 - Learn the Basics: Use free resources like the comprehensive Plus500 beginner's guide to build a strong foundation. Understanding the fundamentals allows the r making of informed trading decisions involving Lyft share CFDs, although the risk of financial losses occurs to all CFD traders.
• Step 2 - Register & Practise with a Free Demo Account: Create your trading account and complete the necessary verification steps. Use our platform's free and unlimited demo mode to practise and refine your trading strategies without risking real money.
• Step 3 - Start Trading: Finally, make your initial deposit and search for Lyft share CFDs on the Plus500 trading platform. Use your newly acquired knowledge to decide whether to take a long or short position. Always implement sound risk management strategies, and regularly review and adapt your approach, keeping in mind the high risk of financial loss inherent in CFD trading.

Conclusion

Trading Lyft shares through CFDs offers investors a flexible way to speculate on price movements without owning the actual shares. To navigate this volatile market effectively, traders should consider utilising a mix of fundamental, technical, and sentiment analysis while employing robust risk management strategies. Understanding the key factors affecting Lyft's share price can help CFD traders make more informed decisions. However, the significant risk of negative financial outcomes is always present when engaging in CFD trading.