Lyft (LYFT) is up 13% in the past three trading days. However, shares of the ride-hailing company are still down more than 60% since we entered the position in early April.
The hope with the position was to take advantage of the post-pandemic rebound in ridership. However, we were forced to roll our put and then accept shares after the stock turned lower. We temporarily exited the position to avoid earnings in early May. This was the right decision, as LYFT took a big hit after the company reported a wider-than-expected second-quarter loss and issued disappointing guidance.
Shares have continued to trend lower since the earnings report, weighed down by concerns of recession dampening demand at the same time Lyft is being forced to spend more to attract drivers.
We have sold puts and calls to generate income, but it simply has not been enough to offset the stock’s poor trading. I think LYFT is dead money for the foreseeable future. Therefore, I want to use the recent relief rally to exit our shares at a loss and redeploy the capital on more lucrative opportunities.
Current Stock Price: $13.65
Cost Basis: $20.47
Action: Sell shares at market
Loss: $6.82, or $682 per 100 shares
Rate of Return: -33.3% in 106 days, or -115% on an annualized basis