6 Lyft Analysts Break Down Q3 Earnings: 'We Think Uber Should Benefit'

LYFT Inc LYFT shares traded higher by 8.8% and Uber Technologies Inc UBER gained 6.8% Wednesday after Lyft reported third-quarter earnings and revenue beats and said driver shortages are easing.

Lyft reported third-quarter adjusted EPS of 5 cents on revenue of $864.4 million. Both numbers beat consensus analyst estimates of a 3-cent loss and $862.7 million, respectively. Revenue was up 73% from a year ago.

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Lyft reported a net loss of $71.5 million in the quarter, which included a $203.3 million loss associated with stock-based compensation and payroll tax expenses.

Lyft reported 18.9 million active riders, missing analyst estimates of 19.7 million. Revenue per active ride was $45.63 for the quarter, ahead of analyst estimates of $43.89. Revenue per active rider was up 14% from a year ago.

Looking ahead, Lyft guided for fourth-quarter revenue of between $930 million and $940 million. Lyft also said its driver supply was up 45% in the third quarter compared to a year ago.

Labor Shortages Easing: Wedbush analyst Daniel Ives said Lyft took a big, profitable step in the right direction in the third quarter.

“The quarter was better than feared, particularly around labor/driver shortages, the impact to pricing and demand as well as to continued driver incentives and profitability,” Ives wrote.

Credit Suisse analyst Stephen Ju said Lyft is moving past peak headwinds.

“While our estimates still contemplate elevated spend vs. pre-pandemic levels, we believe onboarding incremental supply will prove positive in the near and longer-term as it outputs to better customer service levels via lower ASPs and improved wait times,” Ju wrote.

Margins Improving: Needham analyst Bernie McTernan said less investment in supply should boost margins and customer demand.

“Despite pockets of weakness geographically and we believe higher prices weighing on demand, LYFT appears poised to exceed '19 revenue levels in '22E with higher margins,” McTernan wrote.

KeyBanc analyst Edward Yruma said Lyft’s margins are trending in the right direction.

“LYFT remains well-positioned to capitalize on a reopening, and we think its business is structurally more profitable than pre-COVID,” Yruma wrote.

Raymond James analyst Aaron Kessler said he is bullish on Lyft’s long-term fundamentals, but the stock’s valuation leaves little room for upside.

“We remain positive on Lyft fundamentals as rideshare adoption remains early, numerous long-term growth drivers (e.g., market adoption, new products, continued innovation), and our outlook for 20%+ long-term EBITDA margins,” Kessler wrote.

Good News For Uber: Morgan Stanley analyst Brian Nowak said Lyft’s numbers bode well for Uber.

“It will be important to monitor UBER's commentary on pace of recovery as we evaluate potential share shifts coming out of COVID,” Nowak wrote.

Bank of America analyst Justin Post said Lyft benefitted from driver supply tailwinds, including a 20% quarterly increase in driver supply and a 17% increase in new driver activations in September.

“Big picture, we think Uber should benefit from similar profitability tailwinds as mobility rebounds and driver supply improves in 2022, demonstrating fixed cost leverage and improving take rates,” Post wrote.

Ratings And Price Targets:

• Morgan Stanley has an Equal-Weight rating and a $67 target.
• Wedbush has an Outperform rating and a $77 target.
• Raymond James has a Market Perform rating.
• Credit Suisse has an Outperform rating and a $70 target.
• Needham has a Hold rating.
• KeyBanc has an Overweight rating and a $72 target.

Photo: Courtesy of Lyft