- Lyft on Tuesday afternoon will release its first quarterly earnings report as a public company.
- While analysts are overwhelmingly bullish on the stock, questions linger over the ride-hailing company’s path to profitability and the competitive threat from Uber.
- Watch Lyft trade live.
Lyft‘s moment of truth has arrived.
The first ride-hailing app to hit the public market is scheduled to release its first-quarter earnings after Tuesday’s closing bell. The report marks Lyft’s first as a public company after debuting in late March.
Since its much-hyped initial public offering, shares have gotten crushed, falling 16% from their $US72 IPO price. They are down 31% from their opening trade of $US87.24.
“Let’s not sugarcoat it, Lyft’s stock has been a head-scratching train wreck since the IPO,” Wedbush analyst Dan Ives wrote in a report to clients last week.
Ives was among the first to cover Lyft shares, initially awarding it a bullish $US80 price target. He has since lowered that to $US67 a share.
His peers, however, are overwhelmingly bullish on Lyft. Of analysts polled by Bloomberg, 15 say “buy,” eight suggest “hold,” and two recommend “sell.”
At the heart of Wall Street’s concerns is Lyft’s uncertain path to profitability – though it’s far from alone in the basket of young, unprofitable tech companies in search of growth – as well as what kind of threat Uber could pose once it IPOs later this week.
Among the report’s closely watched measures will be gross bookings as a percentage of total revenue, as well as active riders, take rates, and total trips logged.
For the first quarter, analysts are expecting an adjusted loss of $US0.99 a share on revenue of $US738.5 million, according to data compiled by Bloomberg.
Following Tuesday’s report, Lyft’s stock may see some outsized volatility as the options market is implying a 12.5% move in either direction, according to the derivative strategy team at Susquehanna.
Bulls will pleased to know that some of the biggest volume late last week involved call-spread buying for the month of May, according to Susquehanna’s analysis. That suggests traders are largely expressing optimistic views heading into the results.
Here’s where other analysts stand on Lyft ahead of its report:
Raymond James: ‘Healthy rider metrics and contribution margin expansion would imply that take rates are stable’
Analyst: Justin Patterson
Price target: $US85
This is an “investment year” for Lyft, Patterson said.
Patterson is most interested in how bikes and scooters are ramping up, and how the company is managing to control its losses.
“We expect 2019 to be the peak EBITDA loss year at $US1.3B, reflecting investments in bikes and scooters and other growth initiatives,” he said in a note to clients.
Should bikes and scooters ramp better than expected, active riders and revenue per active rider metrics could benefit, he said.
Wedbush: “Major ‘Prove Me’ Print With Uber Show Lurking”
Analyst: Dan Ives
Price target: $US67 (from $US80)
“We had anticipated that LYFT shares would come under pressure as investors we’ve spoken with had been worried that Uber’s S-1 and roadshow could be a dark shadow over Lyft’s stock in the near-term,” analysts led by Ives wrote in a note to clients last week.
They added: “We continue to favour Uber (IPO pricing next week) over shares of Lyft at current levels.”
The team also took down its first-quarter revenue estimate from $US757 million to $US743 million, as well as its full-year revenue estimates for 2019 and 2020.
Susquehanna: ‘Intermediate-to-long-term competitive and industry dynamics worry us’
Analyst: Shyam Patil
Price target: $US57
Patil likes Lyft’s service and growing total addressable market (TAM), but he’s wary of the intermediate- and long-term competitive environment.
He’s worried “about the competitive dynamics of being the #2 player in a market where scale is extremely important, and switching costs for riders and drivers are relatively low and barriers to entry – while they exist – aren’t insurmountable, especially for larger-scaled US and international Internet companies.”
For the first-quarter results, he believes the company likely set its expectations “conservatively,” and expects the “typical upside to Q1 results.”
KeyBanc: ‘We are likely to pay particular attention to commentary surrounding forward growth’
Analyst: Andy Hargreaves
Price target: N/A
“Given the IPO publicity and recent momentum, we expect Lyft to at least meet expectations in the 1Q,” analysts led by Hargreaves wrote in a Sunday note to clients.
“Growth in revenue and active riders will be key metrics to watch as we get a feel for the sustainability of growth coming out of significant share gain,” they added.
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