Lyft's Bumpy Ride May Bite GM After a$285 Million Profit Bump
(Bloomberg) -- General Motors Co. reported a tidy $285 million profit on its stake in ride-hailing company Lyft Inc. in the first quarter, a key reason the automaker handily beat earnings estimates.
The second quarter may not be so friendly. Since the start of the April, Lyft's shares have plunged 24 percent. Without a rebound, GM might have to report a loss on its stake that will hurt earnings, said David Whiston, an analyst at Morningstar Inc.
Lyft went public on March 28 and peaked the following day at $78.29; the stock closed at $59.80 on Tuesday. GM spokesman Tom Henderson said the automaker will revalue its Lyft stake at the end of every quarter and report material gains or losses.
If Lyft's volatile shares continue to sour on GM, the market might shrug based on Tuesday's trading. Investors gave the company little credit for the 31 cents-a-share gain associated with the higher valuation of its stakes in Lyft and French carmaker Peugeot SA as of March 31. GM shares closed down 2.6 percent to $38.95.
To contact the reporter on this story: David Welch in Southfield at dwelch12@bloomberg.net
To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Chester Dawson
©2019 Bloomberg L.P.
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