San Francisco-based mobile ride-sharing company, Lyft, saw a drop in shares early this month.

The dip came following Bank of America's bearish call on the company. Although Bank of America analyst Michael McGovern sees a lot of potential in the ride-sharing industry, he is also apprehensive, at least in the near term, about a number of aspects of Lyft's LYFT, -4.32% scenario. Initiating coverage of Lyft with a low-performance rating and $14 price objective, according to MarketWatch, McGovern wrote to clients.

"While we see long-term option value in Lyft as the largest pure-play U.S. rideshare name, near term we expect its smaller scale to create unique challenges in its post-pandemic recovery, including share losses,” McGovern said.  

The Bank of America analyst also underscored remarks from Uber Technologies Inc.’s UBER +1.70% management team, noting that "Uber’s market share in the U.S. mobility market was at or near multi-year highs during the second quarter," MarketWatch reported. McGovern also looked at comments from Lyft indicating 4% sequential growth in rides during the month of July, although he said that “normalized” growth was possibly lower when taking into consideration that July has one more day than the month prior.

“Uber also disclosed 4% [month-over-month] trips growth in July, but this includes the slower-growth Delivery segment, suggesting Uber’s [month-over-month] rides growth outpaced Lyft’s in July.” 

McGovern also said that "recent speculation may be more hype than substance," referring to "social media chatter" of Lyft being possibly acquired by another company and investors responded by pushing Lyft's stock down, Nasdaq reported.

Despite announcing that 'the team did fantastic work' citing its second-quarter financial results, "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," according to Nasdaq.