Lyft Q4 Results Preview

The pressure is on Lyft to speed up to profitability

When: 
Tuesday 11th February after US market close

Expectations:
  • Losses $1.38 cents per share
  • Revenue: +47% $984 billion vs 63% increase in Q3

Look back at Q3
Lyft’s Q3 revenue soared 63% to $955.6 million. Active riders climbed 28% yet it still posted a net loss of $463.5 million, significantly worse that the $249.2 million from the same period a year earlier. Yet despite eye watering losses Lyft remained confident, announcing it expected to be profitable (EBITDA) basis by Q4 2021.

Profitable?
So far Lyft has failed to live up to its IPO hype. As the ride sharing business continues to lose money, traders will be paying particular attention to the firms progress towards profitability goals. Lyft has lost around 1/3 of its value since its IPO last March as management attempt to convince investors that it can keep driving growth whilst gradually shrinking losses. Lyft highlights modest price increases and focus on high value modes as means to arrive at profitability faster. Traders will scrutinize growth in the core ride hailing segment as well as segments that Lyft believes will drive profits.

Restructuring
Days ago, Lyft announced that it was laying off around 90 worker (2% of its workforce) as it restructures its sales and marketing team, in order to reach its 2020 business goals. Across 2019 Lyft underwent several rounds of job cuts, slimming down the business. Traders will be looking for more details on the restructuring and what it means for profitability.

Lyft vs Uber
Comparisons will of course be drawn between Uber and Lyft. Last week Uber said that it expected to report adjusted profit in Q4 2020, ahead of its previous projection following a narrower than expected loss in Q4. The share price soared 10%. 
So the pressure is on Lyft to follow Uber’s path to quicker profitability. Failure to do so could hit Lyft’s share price. 

Regulation
Lyft, like Uber, must address regulatory issues. California recently enacted a new law which is currently being challenged, which raises questions over the standards at which a worker is considered an employee and is entitled to sick pay and benefits. If this results in a change to the Lyft business model consumers could face 100% of the bill increase. Traders will be keen to hear Lyft elaborate on the potential impact to the business. A cautious tone could send the share price lower.

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