LYFT Gains 13% Since Posting Q3 Earnings: How Should You Play It?

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.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.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 EarningsStrong 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 ThrivesWith 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 WellHighlighting 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 PerformanceOver 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 Image Source: Zacks Investment Research Currently, Lyft trades below the Wall Street average price target of $17.96 per share, indicating a 10.3% upside from the present levels. Image Source: Zacks Investment Research Encouraging Estimates for LYFTThe Zacks Consensus Estimate for LYFT’s 2024 and 2025 earnings per share implies 41.5% and 14.8% year-over-year upticks, respectively. Encouragingly, the company is witnessing northbound estimate revisions for the current and the next year. The consensus mark for 2024 and 2025 revenues suggests 31.5% and 15.7% increases, respectively. Image Source: Zacks Investment Research Final Thoughts: Buy LYFT NowGiven the positives surrounding the company, as highlighted throughout the write-up, we believe that investors should add the Zacks Rank #2 (Buy) stock to their portfolios for healthy returns. The company’s current Zacks Rank supports our stance. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mobileye Global Inc. (MBLY): Free Stock Analysis Report Lyft, Inc. (LYFT): Free Stock Analysis Report Uber Technologies, Inc. (UBER): Free Stock Analysis Report DoorDash, Inc. (DASH): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks