Shares of the ride-hailing company Lyft (LYFT 12.02%) were hitting the brakes today after an analyst threw cold water on speculation that Lyft may be the target of a takeover bid yesterday.
Bank of America analyst Michael McGovern said that "recent speculation may be more hype than substance" concerning any automakers wanting to buy Lyft, and investors responded by pushing Lyft's stock down by 5.2% as of 11 a.m. ET today.
Speculation that Lyft might be acquired appeared to have started on Twitter, with an account saying that Ford Motor Company and General Motors were considering purchasing the company.
The possibility of a potential Lyft acquisition was then referenced in an article by The Information earlier this month, citing "social media chatter," which added to the speculation.
But McGovern said yesterday that there was "little validation of takeover speculation either on Twitter or in the press" and added that the current economic environment makes it even less plausible that a company would spend the money to buy Lyft right now, according to The Fly.
Lyft's share price drop today comes at an already difficult time for the company's stock. Shares of the ride-hailing company are already down 64% year to date and things could continue to be volatile for a while longer.
The Federal Reserve increased the federal funds rate again yesterday by 75 basis points and suggested further increases are coming.
Lyft reported better-than-expected second-quarter results, but investors are still very concerned that rising interest rates could lead to a slowing economy, which could have a negative effect on Lyft's business.
When you add into the mix recent rumors of a takeover, investors are digesting a lot of information that's adding to Lyft's stock price volatility.