Since Uber reported strong earnings last week, investors and industry watchers are now turning their attention to Uber’s smaller rival, Lyft. While Uber has successfully turned its business around, achieving GAAP profits in its latest quarter, Lyft hasn’t experienced the same level of success. Although both companies are benefiting from a recovery in rides activity, Uber has the added advantage of company-specific initiatives that Lyft doesn’t have access to. Consequently, Uber’s stock has surged nearly 80% this year while Lyft’s stock remains relatively stable.
A Closer Look at Lyft’s Performance
Investors eagerly await Lyft’s upcoming financial results, which will be released after Tuesday’s closing bell. One significant development that analysts are interested in is the improvement in Lyft’s value proposition due to more competitive pricing. Monness, Crespi, Hardt & Co. analyst Brian White recently shared his curiosity about how riders have responded to this initiative and its financial implications for Lyft, as well as the sustainability of this program.
Key Details to Watch for in the Report
Here are the key details to look out for in Lyft’s upcoming report:
Analysts tracked by FactSet anticipate a loss of 1 cent per share for Lyft in the second quarter after earning 13 cents per share in the same quarter last year.
According to FactSet’s consensus, analysts expect Lyft’s revenue to be $1.02 billion for the quarter, indicating growth from $991 million in the same period the previous year.
Lyft has experienced significant fluctuations in its share prices after each of its last five earnings reports, with four of those movements being downward. While Uber shows progress in terms of profitability, analysts will be closely monitoring Lyft’s own momentum, even though achieving GAAP profitability seems unlikely for the company in the near future.
The Key Question for Lyft
According to Evercore ISI analyst Mark Mahaney, the main question surrounding Lyft is whether or not the company can escalate its profitability. Mahaney expects further information regarding this matter in the upcoming quarters since Lyft’s management withdrew their previous targets during the fourth-quarter call.
For the most recent quarter, Mahaney anticipates that Lyft will post earnings that are roughly in line with expectations. He considers the estimates to be “ballpark reasonable to slightly conservative.”
Analyst opinions are divided on the possibility of a Lyft acquisition. According to one analyst, it is not a clear-cut situation and requires further examination.
John Blackledge from Cowen & Co. is particularly interested in the company’s profit picture. He believes that investors will concentrate on ride-share trends leading into summer, as well as any insight regarding margins. This interest arises after an April restructuring and as investors await new long-term targets, which are expected to be disclosed before year-end.
Assessing the CEO’s Impact
The upcoming earnings report will serve as an initial indicator of how Chief Executive David Risher is performing in his role. Risher took on the position in April, and Wall Street will now have the opportunity to analyze his early impact on the business. However, some believe that evaluating his performance after just a single quarter’s work would be unfair.