Lyft Q4 Results Preview
Fiona Cincotta February 10, 2020 9:56 AM
The pressure is on Lyft to speed up to profitability
Tuesday 11th February after US market close
- Losses $1.38 cents per share
- Revenue: +47% $984 billion vs 63% increase in 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.
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.
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.
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.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.