Lyft, Inc (NASDAQ:LYFT) was trading down over 26% in the premarket on Wednesday after printing its first-quarter earnings after the market close on Tuesday.
The mobile-app-based transport company printed a big earnings beat, which caused the stock to spike up over 7% initially, but just minutes later, Lyft shares began to plunge due to its second-quarter guidance coming in lower than estimates.
Lyft reported earnings per share of 7 cents on revenues of $875.6 million, beating the estimate of a 7-cent loss on revenues of $846 million. The company said during its conference call that it expects revenues for the second-quarter to come in between $950 million and $1 billion, which is below the estimate of $1.02 billion.
Lyft has been trading in a long-term downtrend since March 18, 2021, losing over 54% of its value. The sharp drop on Wednesday accelerated the decline, bringing Lyft down to new 52-week lows, to prices the stock hasn’t seen since October 2020.
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The Lyft Chart: Lyft gapped down over 27% to start the trading day on Wednesday, and within the first five minutes of the market opening had fallen an additional 5%. The decline represents a new low in Lyft’s downtrend, with the most recent lower high printed at the $34.35 level on April 29.
- The stock will eventually bounce up to at least print another lower high and that rebound is likely to come soon because Lyft’s relative strength index (RSI) is measuring in at about 21%, which puts the stock deep into oversold territory and can signal a buy opportunity for bullish swing traders.
- Bullish traders and investors can also watch for signs of a volume climax, specifically increasingly high bearish volume on short timeframes, to indicate the bears have become exhausted, and a bounce is imminent.
- The gap above between $24.42 and $30.06 is about 90% likely to be filled at some point in the future. When Lyft rises up to form its next higher low, the gap is likely to be at least partially filled.
- If Lyft closes the trading day near its low-of-day price, the stock will print a bearish kicker candlestick, which could indicate lower prices are in the cards for Thursday. If the stock closes the trading day near its opening price or near its high-of-day, Lyft will print a doji candlestick or hammer candlestick, respectively, which could indicate a bounce up is in the cards.
- Lyft has resistance above at $21.34 and $25.07 and support below at $18.66 and the all-time low of $14.56.
