Lyft Soars After Smashing Expectations, But An Ugly Future Awaits

Lyft Soars After Smashing Expectations, But An Ugly Future Awaits

Back at the start of February, just before the world shut down due to the Wu Flu, Uber delighted investors when it predicted that it would (somehow) reach profitability one year ahead of schedule, a move which its main competitor Lyft failed to copy, and the market punished its stock accordingly. Just three months later, Uber may have changed its mind, considering it just announced 3,700 layoffs – hardly the confidence boosting corporate activity from a company hoping to turn profitable- with the news spooking Lyft investors who pushed its stock as much as 5% lower ahead of earnings.

But was it warranted? One look at LYFT earnings suggests that perhaps this time around it is Uber – with its much more international operations – that is hurting far more, because in a surprise to most LYFT easily surpassed some investors’ worst expectations Wednesday when it not only beat expectations, but pushed closer to profitability and reported moderate growth of the ride-hailing business in a quarter marred by the effects of the coronavirus pandemic.

The San Francisco-based ridehailing company reported Q1 revenue of $956MM, a 23% increase from the $776MM a year ago, and smashing expectations of $829.6MM; the resulting adjusted loss of $97.4MM, down 20% Q/Q, was roughly half the expected loss of $179.6MM.

Adjusted EBITDA came in at negative ($85.2MM), down 35% Q/Q and far better than the ($201.2MM) EBITDA expected, a -9% Adj EBITDA margin compared to -28% a year ago, a 19% improvement Y/Y.