The report comes after after a disappointing first quarter where the number of rides fell short of estimates, which the company blamed on storms in the northeastern U.S. impacting more than three million rides / Photo: Lyft
Shares of taxi and car-sharing service Lyft fell nearly 2% in premarket trading on Friday after the company’s first-quarter profits fell short of Wall Street expectations despite significant investment in international expansion and premium offerings. Lyft’s earnings say those efforts could begin to pay off only in the second quarter.
Details
Lyft shares fell nearly 2% in premarket trading on Friday to $13.90 per share.
The company reported that in the first quarter, revenue increased 14% year over year to $1.7 billion, while earnings per share quadrupled to $0.04 per share. Wall Street’s consensus forecast for EPS was $0.057 per share. The result missed analyst expectations partly because of integration costs tied to recent acquisitions, according to Bloomberg.
Bloomberg noted that the number of rides completed through the Lyft app in January-March also fell short of analyst expectations. The metric increased nearly 8.5% year over year to 236.9 million, versus Wall Street expectations of 241.5 million.
Lyft lost roughly 3 million rides because of winter storms in the U.S., CFO Erin Brewer told Reuters. According to Brewer, the severe weather mainly affected Lyft’s bike and scooter rental business, but also impacted its rideshare service.
Lyft has recently been working to transform itself from a local app for rides “out to dinner” into a global hybrid transportation platform, CEO David Risher said in February.
Lyft has been actively pursuing acquisitions to catch up with its larger peer Uber and expand outside of North America, Bloomberg wrote. Last year, the company acquired European taxi app Freenow, and this week completed its acquisition of UK taxi app Gett.
Outlook
Year to date, Lyft shares have plunged nearly 30%.
“Although its current financials are improving, investors are growing more concerned about the future,” Andrew Rocco, stock strategist at Zacks Investment Research, told Reuters.
The management remains optimistic. In the second quarter, Lyft expects gross bookings growth of 18-21% year over year to $5.30-5.43 billion, according to the earnings release. Wall Street’s consensus forecast for the metric stands at $5.31 billion, according to Bloomberg data.
Risher is also tying Lyft’s future prospects to the development of autonomous transportation. To support that effort, the company is building a fleet-management hub in Nashville, including for autonomous vehicles. Its opening is scheduled for autumn, according to the earnings release.
Another growth area is the expansion of premium services, Bloomberg writes. In October, Lyft acquired UK-based TBR Global Chauffeuring, a provider of luxury corporate and business travel services. The acquisition will strengthen Lyft’s position in the premium segment, the company said at the time.
Wall Street remains broadly cautious on the stock’s prospects: the shares have 32 “hold” ratings, 15 “buy” calls, and one “sell” recommendation. The average target price stands at $19.60 per share, implying more than 38% upside from the Thursday closing price.
