Hey Global Investor! Here’s what you need to know before the US markets open.
Market Snapshot 📈
S&P 500 (Friday’s Close) 4,123.34 -23.53 (0.57%)
NASDAQ (Friday’s Close) 12,144.69 -173.03 (1.40%)
FTSE 100 (5:30 PM IST) 7,252.05 -135.89 (0.77%)
NIFTY 50 (Today’s Close) 16,301.85 -109.40 (0.67%)
USDINR (Today’s Close) 77.43 (1 Year +5.63%)
🔥 Top Movers
🚖 Lyft: In Need Of A Lift?
A stock being down two-thirds from its peak is one issue, but it has trouble written all over when a stock is down two-thirds from its IPO price. In this situation is ride-hailing company Lyft Inc. (LYFT). Its future outlook, unfortunately, isn’t inspiring much confidence.
Profitable On Paper
When Lyft was launched in 2012, it went after Uber to gain market share. A decade later, while Uber commands over two-thirds of the ride-hailing market in the US, Lyft captured the rest. However, Lyft’s road to profitability has been tenuous at best.
Before the pandemic hit in 2020, Lyft had assured investors that it would turn profitable by the last quarter of 2021. The company was losing up to $1B a quarter until then. When people were forced indoors during the pandemic, ride-hailing apps bore the brunt.
At the height of the pandemic’s first wave, Lyft cut its employee count by 17% (or ~1K). Another 288 were furloughed. Employees who stayed on took pay cuts ranging between 10% to 30%. This restructuring cost Lyft ~$30M.
In August last year, Lyft reported its first-ever positive adjusted EBITDA of $23.8M for the quarter, meaning it had turned profitable on an operating basis. Adjusted EBITDA doesn’t give an accurate picture since it excludes a number of non-operating expenses. Considering these expenses, the net loss for Q2 2021 stood at $251M.
Since then, Lyft has continued to show operating profits and reported a net loss. Lyft’s rival Uber, which has a more diversified portfolio compared to Lyft, reported a net loss of $5.9B in Q1 this year. Profitability, it seems, is farther away than these players would acknowledge.
Lyft’s investors have been clamoring for clarity on what the road to profitability will look like. That brings us to Lyft’s latest quarterly results and future outlook.
Key Highlights From Q1:
- Revenue: $876M Vs $846M expected
- Adjusted Earnings Per Share: $0.07 Vs Loss of $0.07 expected
- Revenue Per Active Rider: $49.18 Vs $47.07 expected (Second Highest after Q4 2021)
Lyft reported another quarterly net loss of $196.9M in Q1, compared to a net loss of $427.3M during the same period last year. Most of the losses were due to stock-based compensation and payroll tax expenses worth $163.2M. It also burned through $167M of cash while having $2.2B cash in its books.
That gives a two-year window within which the company has to get well entrenched into sustained profitability. However, there was another concern for Q1. The number of active riders fell to 17.8M in Q1, compared to 18.7M during Q4 2021. The management passed this off as a one-off, stating that active riders were up 9% month-over-month in February and another 12% in March.
For the current quarter, Lyft expects revenue of ~$975M, compared to consensus estimates of $1.02B. The company expects operating profits of ~$15M, well below consensus expectations by as much as $50M. The management wants to ensure Lyft remains profitable on an Adjusted EBITDA basis for the year.
In the past few months, the increase in gas prices in the US meant many drivers either stopped driving or drove less. To combat the higher gas prices, Lyft introduced a fuel surcharge of $0.55 in most markets at the end of the quarter.
Lyft announced that it would continue to spend on driver incentives to retain drivers. Exactly how much is uncertain. For Q1, the figure stood at $350M, up 3% Q-o-Q. Even as Uber upped the ante by announcing partnerships with New York City and San Francisco’s black-and-yellow taxis that will migrate their drivers onto the Uber app, Lyft didn’t have any such partnerships in the works.
Instead, the company is resuming its carpooling services in five US cities after restarting them in Philadelphia and Miami last summer. Poor guidance, continued cost increases, and no specific strategy to take on Uber meant investors were a frustrated lot.
Shares fell 30% on Thursday, the most on record, dragging shares to a 52-week low. Lyft went public at $72 per share and has never seen that level again a couple of days after listing. The stock has lost ~35% in the last two trading sessions. The company wants people to hail their rides and investors to hail its shares! As of now, it surely needs a lyft to lift itself out of trouble! Taxi, anyone?
LYFT ended at $20.51, down 6.90%.
Company Snapshot 📈
LYFT $20.51 -1.52 (6.90%)
Analyst Ratings (40 Analysts) BUY 62% HOLD 35% SELL 3%
Later Today 🕒
- AMC Entertainment Holdings Inc. Earnings (AMC)
- Applied Therapeutics Inc. Earnings (APLT)
- BioNTech SE Earnings (BNTX)
- Novavax Inc. Earnings (NVAX)
- Palantir Technologies Inc. Earnings (PLTR)
- 3D Systems Corp. Earnings (DDD)
- Lordstown Motors Corp. Earnings (RIDE)
- Coty Inc. Earnings (COTY)
- Blue Apron Holdings Inc. Earnings (APRN)
- Duke Energy Corp. Earnings (DUK)
- Tyson Foods Inc. Earnings (TSN)
- The Dun & Bradstreet Corp. Earnings (DNB)
- IAC/InterActiveCorp. Earnings (IAC)
- Plug Power Inc. Earnings (PLUG)
- Zynga Inc. Earnings (ZNGA)
- 8:30 PM IST: Consumer 3-year Inflation Expectations
Today’s Fun Fact
In 2018, IBM was the most innovative company in the world with 9,100 patent grants, among them are patents for artificial intelligence, blockchain, cloud computing, and quantum computing