Dj Cfo Brewer Surrenders 51631 Of Lyft Inc >Lyft

Earlier this month, San Francisco-based ride-hailing company Lyft LYFT reported strong third-quarter 2024 results. Since the announcement on Nov. 6 before the opening bell, shares of the company have rallied 13.1% to $16.29, reflecting investor optimism about its improved outlook for 2024.

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Does the improving ride-sharing market and LYFT’s operational effectiveness present a buying opportunity? Or should investors wait for a better entry point? Before diving into these considerations, let us examine the highlights of LYFT’s recent quarterly results and their future implications.

3 Major Takeaways From LYFT’s Q3 Earnings

Strong Top & Bottom-line Performances: Lyft's adjusted earnings per share of 29 cents surpassed the Zacks Consensus Estimate by 45%, reflecting a 20.8% year-over-year increase. Operating revenues rose 32% year over year to $1.52 billion, beating expectations by 6.7%. The impressive results were driven by double-digit rides growth in rideshare, and the company’s bike and scooter offerings.

Gross Booking Growth: Gross bookings increased 16% year over year in the September quarter to $4.1 billion. The uptick was driven by the record active riders of 24.4 million in the quarter. Active riders increased 9% year over year in the quarter. The total number of rides in the quarter reached a record 217 million, reflecting a year-over-year increase of 16%. These exceptional numbers highlight that the innovations introduced by LYFT this year to attract drivers and riders are bearing fruit.

Management stated that drivers are spending more time with Lyft than before. As a reflection of this, driver hours in the September quarter reached an all-time high. This starkly contrasts the results of rival Uber Technologies UBER, wherein gross bookings slowed down in the third quarter of 2024. At UBER, total gross bookings in the quarter increased 16% year over year to $41 billion, less than the 19% witnessed in the second quarter of 2024, highlighting a slowdown.

Impressive Outlook: For the fourth quarter of 2024, Lyft expects gross bookings of $4.28-$4.35 billion (up 15-17% year over year). The adjusted EBITDA is estimated to be $100-105 million, and the adjusted EBITDA margin (calculated as a percentage of gross bookings) is expected to be 2.3-2.4%.

For 2024, Lyft anticipates year-over-year ride growth in the mid-teens. Gross bookings are likely to increase 17% year over year. The adjusted EBITDA margin (calculated as a percentage of gross bookings) is expected to be 2.3%, higher than the prior mentioned 2.1%. The free cash flow is anticipated to exceed $650 million. The bullish outlook is indicative of the steady demand for LYFT’s ride-hailing services from people returning to workplaces.

LYFT’s Price Lock Feature Thrives

With the preference for the return-to-office mode by many companies, there is a surge in weekday demand for ride-hailing services. To compete more effectively with rivals in the ride-hailing arena, Lyft has recently introduced a Price Lock feature. This feature allows users to bypass surge pricing during peak commuting hours.

Lyft riders can limit the cost of rides by paying just $2.99 per month. By locking in a commute price, they can also save money through the feature. If the price of the ride is lower than a rider’s locked-in price, the person pays the lower rate.

On the third-quarter conference call, management stated that the Price Lock feature was performing better than expected, with more than 200,000 active passes issued by September. On the call, management also noted that riders availing of Price Lock take four more rides per month on average than they did prior to buying the pass. Apart from commuters, this feature is helping drivers by creating more predictability on when and where to drive.

Lyft’s AV Ambitions Bode Well

Highlighting its ambitions as far as the lucrative and emerging autonomous vehicle (AV) market is concerned, Lyft recently inked three separate partnerships with startup May Mobility, automated driving company Mobileye Global MBLY and Nexar.

The deal with May Mobility aims to launch AVs on the Lyft app from 2025, starting in Atlanta. The data-sharing agreement with Nexar is designed to give operators better insights into how to train autonomous driving systems. The deal with Mobileye aims to facilitate the widespread commercialization of AV services by industry-leading fleet operators.

Previously, Lyft partnered with Motional to launch a driverless ride-hail service in Los Angeles. However, the partnership ended. Lyft’s recent deals pertaining to AV highlight that it does not aim to be left behind as rival Uber has signed many AV-related deals.

Impressive Price Performance

Over the past three months, Lyft’s shares have performed very well, outperforming its industry, as well as rival Uber and fellow industry player DoorDash DASH.

Three-Month Price Comparison

Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the 'long' context, investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.

Even though momentum is a popular stock characteristic, it can be tough to define. Debate surrounding which are the best and worst metrics to focus on is lengthy, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.

Below, we take a look at Lyft (LYFT), a company that currently holds a Momentum Style Score of A. We also talk about price change and earnings estimate revisions, two of the main aspects of the Momentum Style Score.

It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Lyft currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.

You can see the current list of Zacks #1 Rank Stocks here

Set to Beat the Market?

In order to see if LYFT is a promising momentum pick, let's examine some Momentum Style elements to see if this ride-hailing company holds up.

Looking at a stock's short-term price activity is a great way to gauge if it has momentum, since this can reflect both the current interest in a stock and if buyers or sellers have the upper hand at the moment. It is also useful to compare a security to its industry, as this can help investors pinpoint the top companies in a particular area.

For LYFT, shares are up 1.91% over the past week while the Zacks Internet - Services industry is down 1.08% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 18.22% compares favorably with the industry's 2.41% performance as well.

Considering longer term price metrics, like performance over the last three months or year, can be advantageous as well. Over the past quarter, shares of Lyft have risen 41.04%, and are up 58.31% in the last year. In comparison, the S&P 500 has only moved 6.16% and 32.62%, respectively.

Investors should also pay attention to LYFT's average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. LYFT is currently averaging 18,801,828 shares for the last 20 days.

Earnings Outlook

The Zacks Momentum Style Score encompasses many things, including estimate revisions and a stock's price movement. Investors should note that earnings estimates are also significant to the Zacks Rank, and a nice path here can be promising. We have recently been noticing this with LYFT.

Over the past two months, 6 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost LYFT's consensus estimate, increasing from $0.74 to $0.92 in the past 60 days. Looking at the next fiscal year, 4 estimates have moved upwards while there have been 2 downward revisions in the same time period.

Bottom Line

Given these factors, it shouldn't be surprising that LYFT is a #2 (Buy) stock and boasts a Momentum Score of A. If you're looking for a fresh pick that's set to soar in the near-term, make sure to keep Lyft on your short list.

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