Shares of ride-sharing company Lyft (LYFT) encountered heavy selling on Wednesday following headlines from General Motors (GM).
On Wednesday, GM announced that the company would be shuddering its robotaxi development plans. GM cited high costs and rising competition, raising concerns that development costs for much smaller LYFT will also become problematic.
Uber (UBER), another ride-sharing company, saw far less selling pressure as investors speculate that it’s better equipped to absorb costs and compete more effectively.
Share of Tesla rose more than 5% on the news as well.
Lyft’s decline was halted by two technical features.
The stock found support at $15, That price is considered a round-numbered support level. This is also the price that Lyft shares surged above after its latest earnings report.
Lyft’s 50-day moving average also provided support for the stock. That trendline currently resides at the $15.15 price level.
Shares of Lyft should find more support from the stock’s 200-day moving average currently at $14.78, but that support will come with risks.
A move below that 200-day moving average will mark a break below the 50-day trendline and the already mentioned round-numbered support of $15.
That technical breakdown of three support levels would ignite technical and algorithm selling immediately.
Investors should be aware of that risk and move forward carefully as the stock has a short-term (4-6 week) target of $12.50.
