Lyft Earnings: Here’s What Has Stock Rallying

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Lyft  (LYFT) - Get Report announced an aggressive cost cutting plan on its earnings print, which showed a revenue beat and bottom line miss for the first quarter. 

The stock rose as much as 17% to $30 a share in postmarket trading. 

Here were the results versus analyst expectations: 

  • Revenue: $955M v. 882M 
  • Active Riders: 21.21M v. 21.6M
  • Revenue Per Active Rider: 45.06 v. $40.06
  • Operating Margin: -43% v. -24%
  • Net loss per share: $1.31 v. 62 cents

Stripping out one-time costs and observing Lyft’s share count, adjusted loss per share seemed to be 31 cents. Revenue grew 23% year-over-year as January and February didn’t have lockdowns or social distancing.

Management announced an aggressive cost-cutting program as the full year 2020 will be home to severe revenue and earnings declines. The company said it wants to shave $300 million of operating expenses on an annualized basis by the fourth quarter of 2020. 

This move puts a floor on earnings declines as social distancing dents demand and top line growth. And if Lyft can maintain its cost structure, investors will not lose a huge amount of confidence in the company’s ability to reach profitability, especially when revenue growth can resume to prior levels. 

The stock had already been down for the past month heading into earnings and trading at an enterprise value-to-sales ratio of far less than 2 times, a valuation hardly representative of a normal growth stock. 

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