Lyft Stock Is Tumbling. Rising Costs Overshadow Solid Results.

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A Lyft ride-sharing car is seen connected Park Avenue successful New York City

Timothy A. Clary/AFP via Getty Images

Lyft banal tumbled Wednesday contempt its better-than-expected June 4th results, arsenic investors focused alternatively connected disappointment with the third-quarter outlook and the company’s expanding costs for operator incentives.

In precocious trading Tuesday, Lyft shares rallied aft the ride-sharing institution disclosed that it reached profitability 1 4th sooner than expected—as measured by adjusted Ebitda, oregon net earlier interest, taxes, depreciation, and amortization.

But connected Wednesday, the banal dived 8.6% to $50.59. Uber Technologies (UBER), which reports results aft the adjacent connected Wednesday, fell down 2.6% to $41.68.

Lyft (ticker: LYFT) posted second-quarter gross of $765 million, up 125% from a twelvemonth ago, and good up of the Street statement astatine $696 million. Profit based connected adjusted Ebitda (earnings earlier interest, taxes, depreciation and amortization) was $23.8 million, including astir $16 cardinal successful one-time gains. 

Active riders (people who took astatine slightest 1 thrust successful the period) reached 17.1 million, up 97% from a twelvemonth ago, and up 27% from the March quarter. Revenue per progressive rider was $44.63, up 14% from a twelvemonth ago, but down somewhat from $45.13 successful the March quarter.

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One crushed for the unit connected the banal is accelerated maturation successful Lyft’s inducement payments to drivers arsenic a mode to boost supply. On past night’s net league telephone with the Street, Lyft said it paid much than $375 cardinal successful operator incentives successful the quarter, up 92% from the March quarter. That is classified arsenic “contra-revenue,” reducing the apical line. The institution said it expects that fig to beryllium higher successful the September quarter, arsenic it pushes to summation proviso to conscionable lawsuit demand.

On the call, Lyft projected third-quarter gross of $850 cardinal to $860 million, up betwixt 70% and 72%, but a small shy of the aged Street statement forecast of $864 million. The institution sees third-quarter adjusted Ebitda successful the $25 cardinal to $35 cardinal range, which would beryllium up from astir $8 cardinal successful the June 4th erstwhile backing retired the aforementioned one-time gains. The institution said the forecast reflects astir a $30 cardinal to $40 cardinal simplification to bespeak reduced thrust prices.

Analyst absorption to the 4th was mixed. 

Gordon Haskett expert Robert Mollins, who has a Hold standing and $62 people connected the stock, writes successful a probe enactment that Lyft is making “solid advancement connected the operator proviso side,” but that the commentary astir spending incremental dollars connected operator proviso “puts a damper” connected the outlook. As Mollins notes, the institution said it would put immoderate incremental gross dollars supra guidance into operator proviso programs.

Needham expert Bernie McTernan was 1 of respective analysts who suggested that operator proviso could get a boost successful aboriginal September arsenic supplemental unemployment benefits travel to an end. Meanwhile, helium notes, “there is inactive a operator proviso imbalance,” with Lyft taking connected the load of investing successful some sides of the market—boosting operator wage portion holding the enactment connected thrust pricing. McTernan keeps his Hold standing connected the stock, and finds that determination are “more compelling maturation opportunities elsewhere successful the U.S. mobility market,” an evident notation to Uber.

MKM Partners expert Rohit Kulkarni makes a akin point: Lyft has go “an progressively charismatic and tactical play connected wide vaccinations and summertime travel,” but helium prefers Uber. The second offers some little valuation and a much diversified bet, with a broader planetary vulnerability arsenic good arsenic a nutrient transportation arm, helium writes. Making the aforesaid point, Atlantic Equities expert James Cordwell says portion results and guidance topped expectations, he’s keeping a Neutral standing connected Lyft shares, “given the richer valuation versus Uber.”

Evercore ISI expert Mark Mahaney, however, distant from the results incrementally much positive, repeating his Outperform rating, portion adjusting his terms people to $76 from $77. But helium besides notes that challenges remain, with thrust availability, hold times, and thrust pricing inactive not optimal.

“Lyft volition person to thin aggressively into operator incentives for different 4th oregon 2 to rebalance the marketplace,” until vaccines much afloat rotation out, reopenings unfold, and request normalizes for enactment and schoolhouse commutes and airdrome trips, helium writes. But helium adds: “Lyft is proving it tin bash this portion breaking done to sustained Ebitda profitability.”

Write to Eric J. Savitz astatine

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