This article originally appeared on April 1, 2019 by the San Francisco Chronicle.

Lyft’s stock sank Monday on the first day of trading after its splashy Wall Street debut, casting a shadow over upcoming initial public offerings for Uber and other money-losing unicorns.

Lyft shares, initially priced at $72, were down 12 percent to $69 at close of trading Monday. The stock opened strongly on Friday and surged 20 percent before closing up 8.7 percent at $78.29 a share.

“Falling below its IPO price is a gut punch for investors and Lyft,” Wedbush managing director Dan Ives said in a statement to CNBC.

The San Francisco ride-hailing company found plenty of takers for its pitch of being poised to transform the $1.2 trillion transportation market, although it currently loses money, and it warned that it may never make a profit. Its IPO was oversubscribed and it bumped up its offering price by double digits from an initial range of $62 to $68 a share.

Some investor eagerness may have been because Lyft was the first ride-hailing company to go public.

Even some hedge funds that lined up for Lyft’s stock said they were more motivated by its scarcity than its business fundamentals. Titan Invest, a portfolio investment app, surveyed 40 hedge funds last month and found that many were dubious about Lyft’s long-term prospects. Even those who were bullish focused on getting in on the IPO at its issuing price and benefiting from a short-term pop on the first day of trading, said Vincent Ning, Titan director of research and operations.

With about 32 million shares issued, over 70 million shares traded hands on Friday during just five hours (Lyft started traded around 11 a.m. EST).

“That suggests the people buying in were not long-term holders,” he said.

Monday’s Lyft slippage, especially if it continues, may give pause to companies planning stock-market debuts to rein in their pricing, he said.

“Banks taking these other names to market may lean a little more conservative on valuation so as not to have this first few days of down-points,” he said.

Barrett Daniels, a partner at Deloitte & Touche who focuses on tech offerings, said that the IPO market is very reactionary.

“It’s important that the first couple of IPOs out of the gate do well,” he said.

Still, he said he thinks that Uber’s gargantuan debut — it’s seeking a $120 billion valuation — is so unique that it won’t be affected.

“Yes, we’re talking about the same sectors, but they’re so different,” he said, referring to Uber’s massive global reach and multiple product areas. “That IPO will be a once-in-a-decade circus.”

Other observers dismissed Monday’s gyrations as typical trading “noise.”

“No news broke today about Lyft; there was no fundamental change to its business model,” said Alejandro Ortiz, principal analyst at SharesPost, which helps arrange sales of private companies’ shares. The stock tumble “illustrates more that short-term mentality that investors have, but Lyft should be seen as a long-term play.”

Michael Lin, director of accounting and transaction services at MorganFranklin Consulting, said Lyft’s IPO was well-managed, pointing to the initial “price pop,” the fact that it was over-subscribed, and the $72 price, which maximized its proceeds.

“There’s a healthy demand for these unicorns and (Friday’s performance) is a good sign of what’s to come,” he said. “I don’t think the fact that the price has come back down is a negative effect per se.”