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Zacks Investment Ideas feature highlights: Lyft, Morgan Stanley, Apple and Facebook
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For Immediate Release
Chicago, IL – April 10, 2019 – Today, Zacks Investment Ideas feature highlights Features:Lyft (LYFT - Free Report) , Morgan Stanley (MS - Free Report) , Apple (AAPL - Free Report) and Facebook .
IPO Enthusiasm Cools, but Apple & Facebook Roar Back to Life
The highly anticipated Initial Public Offering of ride-sharing giant Lyft was promising at first, rallying well above the already-increased IPO price of $72/share and settling the first day up just a bit under 9%.
That’s generally just about the right amount for a healthy offering because it’s a nice reward for early investors, but not such a huge gain that it appears that the offering company left big money on the table in an underpriced deal.
Unfortunately, it’s been rough sailing since then for the former tech “unicorn” and the shares are currently trading 4% below the offering price – though still well above the valuation established by Lyft’s final round of private financing in 2017.
Lyft has threatened legal action against Morgan Stanley, accusing the brokerage of selling a derivative product that allowed insiders and short sellers to synthetically sell shares prior to the expiration of the lockup. Morgan denies encouraging shorting, but the fact that there’s selling pressure on the shares at all – regardless of the vehicle – portends rough seas ahead for Lyft and potentially the rest of the IPO hopefuls as well.
Lyft’s performance has dampened expectations for the offerings of several other expected IPO’s of highly valued tech companies - Uber, Airbnb and Pinterest, as well as dozens of other planned 2019 offerings.
On Monday, Pinterest announced in its updated preliminary prospectus that it planned to sell 75 million shares at a range of $15-17/share, below prior expectations and roughly equivalent to its most recent private equity valuation.
Analysts sometimes anticipate that in an environment when billions of dollars of new shares become available for trading for the first time, the price of established companies will suffer as cash is reallocated out of existing companies and into the new offering.
That’s definitely not the case for tech giants Apple and Facebook, both of which have made significant recoveries from 2018 lows and are now in the midst of their own strong rallies, outpacing what’s already been a hot start for the broad markets in 2019.
After suffering from an apparent slowdown in iPhone sales (Apple) and privacy and regulatory concerns (Facebook), they have now gained 28% and 36% respectively in 2019 and investors have definitely regained their taste for shares of the biggest tech stocks.
The takeaway seems to be that while it’s easy to get excited about the offering of shares of the private companies that have become household names while earning private equity valuations well north of a billion dollars, there’s no substitute for earnings.
Even after the recent rally, Apple still trades at a forward P/E ratio of 17X – roughly the same as the S&P 500 – and Facebook only slightly higher at 23X.
Both Apple and Facebook report quarterly results at the end of the month, and for now, investors are showing a clear preference for the stability of big earnings, even as flashier new stocks become available.
Today's Best Stocks from Zacks Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%. This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year. See their latest picks free >>
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Lyft, Morgan Stanley, Apple and Facebook
For Immediate Release
Chicago, IL – April 10, 2019 – Today, Zacks Investment Ideas feature highlights Features:Lyft (LYFT - Free Report) , Morgan Stanley (MS - Free Report) , Apple (AAPL - Free Report) and Facebook .
IPO Enthusiasm Cools, but Apple & Facebook Roar Back to Life
The highly anticipated Initial Public Offering of ride-sharing giant Lyft was promising at first, rallying well above the already-increased IPO price of $72/share and settling the first day up just a bit under 9%.
That’s generally just about the right amount for a healthy offering because it’s a nice reward for early investors, but not such a huge gain that it appears that the offering company left big money on the table in an underpriced deal.
Unfortunately, it’s been rough sailing since then for the former tech “unicorn” and the shares are currently trading 4% below the offering price – though still well above the valuation established by Lyft’s final round of private financing in 2017.
Lyft has threatened legal action against Morgan Stanley, accusing the brokerage of selling a derivative product that allowed insiders and short sellers to synthetically sell shares prior to the expiration of the lockup. Morgan denies encouraging shorting, but the fact that there’s selling pressure on the shares at all – regardless of the vehicle – portends rough seas ahead for Lyft and potentially the rest of the IPO hopefuls as well.
Lyft’s performance has dampened expectations for the offerings of several other expected IPO’s of highly valued tech companies - Uber, Airbnb and Pinterest, as well as dozens of other planned 2019 offerings.
On Monday, Pinterest announced in its updated preliminary prospectus that it planned to sell 75 million shares at a range of $15-17/share, below prior expectations and roughly equivalent to its most recent private equity valuation.
Analysts sometimes anticipate that in an environment when billions of dollars of new shares become available for trading for the first time, the price of established companies will suffer as cash is reallocated out of existing companies and into the new offering.
That’s definitely not the case for tech giants Apple and Facebook, both of which have made significant recoveries from 2018 lows and are now in the midst of their own strong rallies, outpacing what’s already been a hot start for the broad markets in 2019.
After suffering from an apparent slowdown in iPhone sales (Apple) and privacy and regulatory concerns (Facebook), they have now gained 28% and 36% respectively in 2019 and investors have definitely regained their taste for shares of the biggest tech stocks.
The takeaway seems to be that while it’s easy to get excited about the offering of shares of the private companies that have become household names while earning private equity valuations well north of a billion dollars, there’s no substitute for earnings.
Even after the recent rally, Apple still trades at a forward P/E ratio of 17X – roughly the same as the S&P 500 – and Facebook only slightly higher at 23X.
Both Apple and Facebook report quarterly results at the end of the month, and for now, investors are showing a clear preference for the stability of big earnings, even as flashier new stocks become available.
Today's Best Stocks from Zacks Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%. This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year. See their latest picks free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.