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Lyft's business outlook is the same now as it was on Friday.
But investors are treating the stock very differently than they were on its IPO day.
Shares plunged 12 percent to $69.01 on Monday, giving up all of their gains from last week's debut and then some, closing $2.99 below the IPO price of $72.
This isn't how IPOs are supposed to work. Typically, investors get their first-day pop and then the momentum slows, with the stock bouncing around possibly even drifting a bit lower. But in breaking below its issue price so soon, Lyft is showing that investors are skeptical of the company's lofty valuation.
More than 41.6 million shares changed hands on Monday after 71.5 million shares were traded on Friday. The company only sold 32.5 million shares in the offering, so the market is seeing more traders than long-term buyers.
"They're shaking out the speculators and making room for the investors," said Lise Buyer, the founder of Class V Group, which advises companies ahead of their public offerings. She said the only fundamental thing that's changed for Lyft is that it now has well over $2 billion in fresh capital on its balance sheet and that "management is fully focused on the business."
In the absence of momentum, Lyft has some challenges in building a long-term investor base.
First, there's no obvious public market company that can serve as a comparison. Uber, which is much larger, is slated to go public soon, but hasn't released its prospectus yet. Thus, there's no way to say where Lyft should trade relative to its sales and growth rate.
Second, Lyft is part of a crop of tech companies that came of age when venture capital was plentiful. Like many other start-ups that launched in the last decade and saw quick market traction, Lyft was able to raise multiple rounds from investors to fuel its operations, and grew its value into the many billions of dollars along the way. Given this spectacular rise in private valuation, it's harder for the new stockholders to turn a profit.
Dropbox provides the closest analogy. It went public last year at a market capitalization of about $8.2 billion. The stock debuted last March at $21, popped right away and even rallied as high as $42 in June. But it's fallen since and is now back near its IPO price.
Snap provides an even more troubling comparison. The social media company debuted in 2017 with a valuation of $24 billion and today is worth $15 billion.
"Most of the value for these companies, a lot of the so-called unicorns coming to market, will have been driven to the benefit of founders and private investors, not public investors," said David Golden, who previously ran tech investment banking at J.P. Morgan and is now a partner at Revolution Ventures in San Francisco. "That's a huge shift from even 10 years ago."
It's a story that we'll likely hear repeatedly this year, as Uber, Pinterest, Slack and Airbnb all gear up to go public after already capturing very large valuations.
The other overhang for the public markets is that only 11 percent of Lyft's outstanding shares are currently available for trading, with the rest mostly locked up for six months. When the lock-up period expires, many employees and early investors will have their first opportunity to sell shares and turn some of their massive paper gains into actual cash.
The risk for investors who hold the stock is that shares will flood the market and that not enough buyers will step up to meet that supply.
Lyft can ease most of those concerns through execution. Back in 2012, Facebook stumbled out of the gate after its much-hyped IPO. The stock fell 11 percent on day two, 9 percent the next day and didn't really recover for five months.
Then it took off. Investors who bought Facebook after the debut and held have more than quadrupled their money.
With Lyft, the story from here will be about its financial performance in the broad daylight of the public markets.
"You're only left holding the bag if your investment horizon is two days," said Buyer. "That's the difference between speculating and investing."
WATCH: Don't rush into IPO parade