Lyft (LYFT) delivered a terrific Q2 2019 result, with its top-line soaring and its bottom line beating analyst estimates by a wide margin. This led Lyft to raise its full-year guidance, proving to investors that this one-time unicorn is not putting the brakes on its operations anytime soon. 

Lyft's Revenue Growth

Looking at the above graph of Lyft's growth rates, which includes projected rates for the rest of 2019, investors' first concern should be whether it can continue to grow so rapidly.

On the one hand, Lyft's current growth rates are clearly not as strong as they were in 2017 when it was exploding on the top-line at 209% year-over-year, or even in 2018 with 103% growth rates. But the ease with which Lyft was able to raise its full-year outlook to approximately 61%-62% versus the same period last year should be very appealing to investors.

Lyft has tremendous tailwinds, as transportation-as-a-service is still a nascent sector. Case in point, Lyft is adding not only different modes of transport, such as bikes and scooters, but it's also partnering up with all kinds of meaningful players in the transportation space, such as Waymo (GOOGL - Get Report) , Avis (CAR - Get Report)  and GEICO. Lyft also became an approved Medicaid transportation provider in Arizona.

Furthermore, Lyft is rapidly deploying new services, such as its Shared Saver, which is a more affordable service for commuters that are either not time-sensitive or willing to walk a short distance.

Stemming Losses

Clear evidence of the success of Lyft's business model is that contrary to what many analysts had been expecting, the more that Lyft's top line grows, the smaller its losses are actually becoming. Accordingly, for 2017 its adjusted EBITDA loss was $946 million. And for 2019, Lyft had previously guided that adjusted EBITDA losses will come in at $1.16 billion. However, on the back of its tremendous Q2 2019 result, not only did Lyft raise its top-line full-year outlook, but now sees its bottom line losses improving now to $860 million in 2019.

Subscription Business Model?

Moving on, the holy grail for any company these days is to attain a subscription-based revenue stream. Realistically, Lyft's business model is not conducive to that of a subscription-based enterprise. Having said that, Lyft's is trialing different initiatives, such as its All-Access Plan, which involves customer's paying upfront for a set number of rides, up to a specific value per ride. Giving how innovative Lyft's management team is, investors should watch this space carefully.

Highly Extended Valuation

For investors paying up for a company with strong growth but with nothing but losses on the bottom line, they could be rewarded with a strong return, provided that they don't overpay for their investment. 

However, as this table shows, it's difficult to argue that Lyft's capital intensive operations are reasonably priced at 5x forward sales. To be fair, Uber (UBER)  appears similarly priced to Lyft. But Uber's sales multiple hides the fact that Uber's losses are substantially worse than Lyft's, while Uber's revenue growth rate is also slower than Lyft's. This implies that the more geographically concentrated Lyft, with operations only in the U.S and Canada, has more to offer investors.

Furthermore, readers should note that Lyft's balance sheet is remarkably flexible with no debt and $3.3 billion of cash and equivalents -- meaning that Lyft has plenty of dry powder to execute against its long-term goals.

The Bottom Line

Lyft continues to offer commuters solutions for all parts of their journeys. This makes Lyft an increasingly sticky platform, as commuters become less price-sensitive and more reliant on Lyft's convenience.

For now, however, investors are getting carried away with Lyft's impressive growth rates and seem willing to pay any price for its stock. However, it is difficult to argue that Lyft's presents valuation offers investors an appropriate risk/reward profile.