What happened

The stock of ridesharing company Lyft (LYFT -0.37%), which just started trading on the Nasdaq last Friday, was hit hard on Monday. It fell as much as 13.4%, closing the trading day down about 12%.

The stock's pullback likely reflects a combination of a cooldown from the sharp rise on Friday and volatility as investors try to decide how to value the stock. In addition, analysts didn't sound optimistic on Monday; several initiated coverage on the stock with neutral ratings.

A chalkboard sketch of a stock price moving lower

Image source: Getty Images.

So what

Following its initial public offering at $72 on Friday, shares climbed 8.7% to $78.29. But Monday's move suggests some investors think the stock is too hot.

While Lyft's revenue is growing rapidly, doubling in 2018 to $2.2 billion, the company is still losing lots of money. It lost $911 million in 2018, worse than $688 million and $683 million losses in 2017 and 2016, respectively.

Analysts from Wedbush Securities, Guggenheim, and Consumer Edge Research initiated coverage on the stock with either neutral or equal-weight ratings on Monday. This suggests analysts believe the stock is fairly valued.

Now what

Given Lyft's pricey valuation and its inability to move closer to profitability recently, investors may want to steer clear of the stock until they witness more execution from management, and see evidence that there's a path to profitability for the company.