’s business may be taking off, but its stock could remain in park.
The ride-share giant reported strong second-quarter results on Wednesday, topping analysts’ estimates for both active riders and revenue per active rider. All in, total revenue of $867 million was well above both Wall Street’s expectation of $809 million. Importantly, Lyft’s loss on adjusted earnings before interest, taxes, depreciation and amortization was significantly less than estimates. Guidance for full-year revenue was also raised, and the company said it now expects to narrow its loss on adjusted earnings before interest, taxes, depreciation and amortization in 2019 versus last year.
In May Lyft said it anticipated 2019 being its “peak loss year,” so narrowing losses this year could be a sign that the road to profitability is shorter than feared. Total expenses in the quarter declined 20% sequentially, including a 34% sequential reduction in sales and marketing expenses. At the same time, the net loss in the quarter of $644 million was significantly greater than that recorded in the same period last year. Lyft said it incurred hefty charges for stock-based compensation, payroll-tax expenses and insurance in the quarter.
Strong revenue growth in the second quarter was notable given tougher year-over-year comparisons following price increases in the year-earlier period. Both Lyft and rival
last quarter hinted that competitive pressures could finally start to ease. Indeed, Lyft noted an improvement in market conditions in its earnings release. The company grew revenue per active rider by 22% from the same period last year while meaningfully growing active riders in the quarter. These positive results despite decreased sales and marketing expenses suggest growing strength in Lyft’s brand with consumers.
Lyft’s stock is down 30% from its closing price on its first day of trading in March but up nearly 28% off May lows. Volatility may very well continue: Investors sent the stock up more than 11% immediately following the earnings release, but gains were largely reversed after an 8k filing showed Lyft’s lockup period associated with its initial public offering would end more than a month earlier than expected. According to the filing, 257.6 million shares of Class A stock may become eligible for sale on Aug. 19.
Lyft is currently trading at a premium to rival Uber despite commanding less market share. The market leader is set to report second-quarter earnings Thursday after the market close. Its results could dictate whether Lyft is accelerating or simply cruising behind Uber’s draft.
Write to Laura Forman at email@example.com
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