What happened
The end of the week for ridesharing-king Lyft (NASDAQ: LYFT) was marked by faint, yet persistent, rumors of a takeover by an outside entity. Scattered chatter in the online investosphere had it that the company is now a buyout target, although who was disseminating these rumors and which party (or parties) might be interested were fuzzy, at best.
But we're human and pay attention to gossip, so stocks trade on rumors. On Friday, in Lyft's case, this was bolstered somewhat by an analyst's take on the situation. As a result, the company's share price accelerated by more than 4% on the day.
So what
Acknowledging those rumors, Loop Capital prognosticator Rob Sanderson reiterated his buy recommendation on Lyft stock at a price target of $31. That's a very bullish level, considering that the current price is almost 50% lower.
In a new research note, despite his acknowledgement of the latest Lyft takeover scuttlebutt, Sanderson pointed out that the source -- or sources -- of the speculation was unclear, implying that investors shouldn't rely on it.
Nevertheless, he wrote, "While we are suspicious on the validity of speculation, the idea of Lyft as a take-out target makes sense to us and has been a recent topic of conversation with investors."
Now what
The analyst feels that Lyft, essentially No. 2 in the ride-hailing market behind Uber Technologies, should be considered a potential strategic asset for companies involved in the next-generation automotive market. He singled out developers of autonomous-driving technology as potential acquirers should Lyft, in fact, be considering a sale.
Such a deal would require a buyer with decent financial resources. At the moment, Lyft's market capitalization is close to $6.4 billion.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
