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Lessons From the Lyft IPO

Fear of missing out is a substantial factor driving the tech sector


On Wall Street, there always seems to be a reliable flock of complacent investors condemned to follow the crowd. After much hype, Lyft Inc. (NASDAQ:LYFT) debuted at $72 per share — above its original contemplated range of $62 to $68 per share.

After a brief flirtation in the high $80s, the stock crashed back down to $71. It is currently trading at $61; its valuation now rests at $21 billion, down from $24 billion. By any measure, a botched liftoff. In short, two days after Lyft’s initial public offering, despite attempts at price support from its underwriters, the stock collapsed. The lesson? Many investors’ fear of missing out on the “next Facebook (NASDAQ:FB)” caused passion and paranoia to supplant reason and its investment handmaiden, prudence.

Even though finding stocks that are undervalued may be more difficult in a modern environment of rapid dissemination of relevant market information, one of the reasons opportunities will always abound is that human nature hasn’t changed much in the last 1,000 years. Greed has always been a prevalent characteristic on Wall Street; the Gordon Gecko ethos

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