- Analysts concerned by rider and revenue growth
- Price target slashed in half to $18
- ‘We’ve been on the wrong side of this one,’ says Evercore analyst
Analysts have admitted to getting it wrong on ride-hailing company Lyft (LYFT:NASDAQ) in wake of a growth miss and weak fourth-quarter guidance that saw the stock lose 20% in after-hours trading overnight.
‘Our long thesis was based on our belief that Lyft’s fundamentals would benefit as a late-cycle rideshare recovery name,’ said analysts at Evercore ISI. ‘We’ve been on the wrong side of this one,’ they said.
‘We believed that the company’s substantial exposure to west coast markets and to shared rides would power strong rider and revenue recovery in the second half of 2022. This may still happen and there may simply be a delay here, but the notably weak growth in Q3 active riders is very concerning to us,’ they explained in a client note.
PRICE TARGET SLASHED
Evercore ISI cut its price target by more than 50% to $18 per share. Lyft shares are set to re-start trading later today at $11.45. The company IPO’d in March 2019 at $72.
Analysts at BTIG were also concerned by the active rider shortfall and below-consensus revenue guide, saying they are ‘likely points of pushback.’ The analysts also estimate that gross revenue before driver incentives rose in single digits year-on-year.
‘Those three factors are likely to feed into investor concern around market share and post-pandemic category growth prospects,’ said BTIG analysts.
Lyft’s update seems to have confirmed to many analysts that the business is losing market share to rival Uber (UBER:NYSE).
WHAT LYFT SAID
Lyft reported adjusted net income of $36.7 million in Q3, beating the $28.1 million consensus, although revenue of $1.05 billion was slightly below the $1.06 billion estimate. The number of active riders jumped over 7% to 20.31 million, but still below the 21.1 million consensus.
‘We have taken decisive steps to ensure we can deliver profitable growth, and we are even more confident in our ability to achieve our 2024 financial targets,’ said Logan Green, co-founder and CEO of Lyft.
For Q4, Lyft guided for revenues of $1.155 billion at the midpoint of its range, slightly below the $1.16 billion consensus. Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) is expected at $90 million, again below the consensus of $91.7 million.
