Lyft Earnings Down 33% Pre-Market
I really want to talk about Lyft today, which might be a penny stock soon enough if this Uber has eaten them narrative continues. LYFT -4.27%↓
It’s not just a big miss on Earnings, it’s that they have stopped growing. Lyft said it expects to make roughly $975 million in revenue in the fiscal first quarter of 2023, lower than the $1.09 billion analysts anticipated, according to StreetAccount.
The Net loss is just really bad here in comparison to Uber eating into their business. The ride hailing company's fourth quarter top line grew 21% year-over-year, to $1.18 billion, beating expectations of $1.16 billion. The company's adjusted net loss of $270.8 million widened from the same quarter's loss of $90.2 million a year ago.
I think Investors will start to panic, but there’s certainly still room for Lyft or it could get acquired by someone like Amazon.
Here's what the ride-hailing company reported, as compared to estimates compiled by Bloomberg:
Q4 revenue: $1.18 billion actual versus $1.16 billion expected
Q4 loss per share: -$1.61 actual versus 13 cents expected
Q4 active riders: 20.36 million actual versus 20.3 million expected
Q1 revenue guidance: $975 million actual versus $1.09 billion expected
Lyft is still Relatively Small
The rideshare company recorded 20.3 million active riders in the third quarter, effectively flat from the third quarter but up 8.7% year over year.
Just 20 million, that’s less than you might have expected. After all they were founded in 2012.
They raised $4.9 Billion before going public. Before the pre-market dive, they are worth $5.85 Billion.
Lyft, as one of the best growth stocks, also expects to make an adjusted EBITDA between $5 million and $15 million in the first quarter.
I don’t see how Lyft is not an Acquisition target in this environment. Amazon to me is the most likely buyer.
The Gig-Economy used to be a thing but even its best companies like Uber and DoorDash have somewhat uncertain futures.
If Uber continues to take marketshare from Lyft, what exactly happens?
Lyft Literally Lost Users Since Before the Pandemic
The rideshare company recorded 20.3 million active riders in the third quarter, effectively flat from the third quarter but up 8.7% year over year. That figure also remains below pre-pandemic levels. In the fourth quarter of 2019, for example, Lyft had 22.9 million active riders. (According to CNBC).
So why are Investors losing so much faith in Lyft besides that they haven’t grown their user base and are being encroached upon by Uber?
“In 2022 we took important steps to strengthen our business and delivered significant value to our customers,” said Logan Green, co-founder and chief executive officer of Lyft. “The better marketplace balance we see today creates significant opportunities for long-term profitable growth. To take advantage of this opportunity we must ensure competitive service levels. Reinforcing our competitive position, servicing more demand and reducing our fixed and variable costs will put us in the best position to deliver strong shareholder returns.”
With limit upside after more than a decade, why would the founders of Lyft not sell their company that would be a huge boost to someone like Google (Waymo One), Amazon or even GM Cruise.
Lyft's autonomous vehicle strategy has changed significantly in the last year or so. In April 2021, the company sold its self-driving unit to Toyota's Woven Planet subsidiary for $550 million, saving the company $100 million annually in operating expenses. Lyft could also have a surprising acquisition buyer like Hyundai or Intel’s Mobileye.
While investors swoon on what Uber, a company that was widely regarded as one of the best value stocks, has achieved, Lyft’s reputation suffers. A bit like what’s happening with the brand narratives of Microsoft vs. Google. It’s not clear to me how this actually plays out without an exit for Lyft.
Analyst note: Lyft's gaping EPS miss is linked to how the company's insurance renewal played out, which Paul also noted. “Our different insurance renewal timing puts differently timed pressure on our P&L. We are not waiting for that to normalize to achieve competitive service levels."
If Lyft goes below $7 and when it does, it may even be a buying opportunity. I’ll have to dig more into the business and see. However the company is more likely to end the week at a price of around $11.30 I reckon.
Many analysts think Uber is a winner-take-all pole position, and Lyft is on very uncertain ground.
The company reported a net loss of $588.1 million, or $1.61 a share for the quarter, more than twice the loss it posted in the year-ago quarter. It attributed $201.3 million of that to stock-based compensation and related payroll tax expenses.
Some analysts still like Lyft:
There is a point where Lyft and Uber do meet the future of the robo-taxi industry, whether that’s 6, 10 or 15 years from now. What they have built out is a brand that many users actually like, at least in the U.S.
Rideshare Industry is a Winner Takes Most Business
About Lyft: Lyft was founded in 2012 and is one of the largest transportation networks in the United States and Canada. As the world shifts away from car ownership to transportation-as-a-service, Lyft is at the forefront of this massive societal change. Their transportation network brings together rideshare, bikes, scooters, car rentals, transit and vehicle services all in one app. They consider themselves a singularly driven by our mission: to improve people’s lives with the world’s best transportation.
But down 33% pre market is not a good sign (data taken from the stock price in Excel). Lyft needs to drop a lot before it’s a potential buy the dip opportunity.
To learn more about Lyft and other companies, check out these articles: