Lyft Falls Despite Solid Earnings and Guidance: What Wall Street's Saying

Lyft posted a solid quarter, which encouraged some analysts, but others saw reasons for concern.
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On the heels of Uber's earnings call in which the company moved its profitability timeline forward, Lyft beat quarterly results and guidance expectations on Tuesday after the close. Still, some analysts lowered price targets because they see limits to growth and were disappointed the company didn't advance its own profit timeline. 

The stock was falling 4.8% to $51.35 a share on Wednesday morning. 

GAAP net loss per share came in at $1.19, narrower than Wall Street’s estimated $1.38 cents. Revenue was $1.017 billion, better than analysts expected $984 million and growing 52% year-over-year. Adjusted EBITDA loss was $130 million, narrower than the expected $165 million and an improvement over last year’s loss of $943 million.

Active riders were 22.9 million, beating estimates of 22.8 million. Revenue per active rider was $44.4, beating estimates of $43.2.

The company guided for a full year 2020 revenue midpoint of $4.613 billion, in line with analysts’ expectations. Adjusted EBITDA loss is guided for between $450 million and $490 million, with the midpoint greater than Wall Street’s estimate of a loss of $490 million.

Here's what analysts said:

Morgan Stanley, Equal-Weight, Price Target Lowered From $56 to $54

"4Q results and 2020 guide highlight Lyft's structural growth and scale limits. Over the long-term (which we acknowledge may not be 2020), this in-line result combined with Uber's slower than expected 2020 global rides bookings growth guidance and our still-low estimated rideshare user adoption calls into question whether the rideshare players will eventually need to compete more on loyalty/price to drive incremental adoption/frequency. We prefer the more scaled Uber with a multi-product loyalty offering, other pockets of global profitability, and faster path to company-wide profitability. Our 2020 adjusted EBITDA increases by $22 million as insurance leverage outweighs one-time costs while our 2021 adjusted EBITDA declines by $18 millionon higher research and development and sales and marketing costs. On consolidated enterprise value-to-revenue basis, out Lyft price target implies 3.1 times 2021 which is a roughly 25% discount to 4.1 times implied 2021 multiple on Uber's ridesharing segment."

- Brian Nowak

RBC Capital Markets, Outperform, Price Target Lowered From $82 to $75

"Revenue growth decelerated, but remains intrinsically high (52%), Net Adds improved quarter-over-quarter and EBITDA loss cut in half year-over-year. The negative was that LYFT did not bring forward profit timeline. Trimming our 2020 Revenue estimates 4% while 2020 EBITDA losses reduced 6%. Price target moves to $75 (from $82) which is based on 4.0 times enterprise value-to-sales on our 2021 sales of $5.8 billion [from $6.3 billion]."

- Mark Mahaney

Goldman Sachs, Buy, Price Target Increased From $58 to $64

"Lyft continues to show the operational efficiencies that we’ve previously noted are critical to the ridehailing industry maturing beyond its hyper-competitive, venture-funded phase. With the stock trading at 3.5x 2020 enterprise-value-to-sales (after-market) versus comparables at 4 times, despite a growth rate that is 2 times faster, we believe the risk/reward in owning LYFT at these levels is favorable. Adjusted EBITDA was ($130.7) million (-12.9% margin) versus consensus of ($165.3) million  and -37.5% margin in the year ago period on revenue outperformance and leverage in marketing spend (14 percentage points year-over-year as percentage of sales). We revise our 2020-2022 revenue and EBITDA estimates 3% and $156 million per year on average to reflect the net impact of pricing growth and more rational competitive dynamics taking hold in the marketplace. 4.5 times 2020 enterprise value-to-sales (versus 4 times prior on improved margin outlook), to reflect revised estimates." 

- Heath Terry

Wedbush, Outperform, $75 Price Target Unchanged

"Investors were expecting more from Lyft after Uber set a stronger path to profitability last week, but taking a step back this quarter represents Lyft continuing to move the needle firmly in the right direction and we would be buyers on any knee jerk weakness this morning. What we've seen so far in the domestic rideshare market is that rationalization in the market came on much stronger than expected in 2019. With Lyft having continued to beat both its own guidance and investor expectations (with both Uber and Lyft improving in that regard), the picture of generating profitable revenue has become much clearer."

- Dan Ives