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- Lyft shares slid as much as 6% on Thursday after the company announced second-quarter results after the market close on Wednesday.
- While active ridership plummeted 60% year-over-year, revenue and losses per share beat expectations.
- Wall Street varied in its reaction. Wedbush analyst Dan Ives cut his price target for the rideshare giant, fearing July and early August rider trends point to a weak third quarter.
- Morgan Stanley boosted its outlook for the stock, citing “immediate benefits” of recent layoffs.
- Watch Lyft trade live here.
The company posted its lowest quarterly revenue since 2017 as stay-at-home orders drastically cut down on rides. Active ridership slumped by 60% year-over-year to 8,688 from 21,807.
Still, Lyft beat estimates for second-quarter revenue and earnings, with its bottom line largely bolstered by massive layoffs. Revenue per rider only modestly declined even as ride activity plummeted.
Here are the key numbers:
Revenue: $339.3 million, versus the $334 million estimate and down 61% year-over-year
Losses per share: 86 cents, versus the 99 cents estimate
Net loss: $437.1 million, versus $644.2 million in the year-ago period
Revenue per active rider: $39.09, versus $39.77 in the year-ago period
“While rideshare rides in the quarter were down significantly year-over-year, we are encouraged by the recovery trends we are beginning to see, with monthly rideshare rides in July up 78% compared to April,” CEO Logan Green said in the earnings report.
Unlike rival firm Uber, Lyft didn’t have a food-delivery business to bolster sales through the quarter. The delivery segment helped Uber offset its own drop in rideshare activity, but the company ultimately failed to surpass Wall Street’s expectations when it reported figures last week.
Lyft executives followed Uber’s lead in saying it may temporarily shut down in California due to labor disputes. Worker advocates have long called for the rideshare giants to deem drivers employees instead of contractors and issue benefits tied to that title.
A state court ruled on Monday that gig-economy firms would need to classify drivers as employees. Uber, Lyft, and other affected companies requested a 10-day stay on the ruling and have warned that shifting their business to accommodate such changes would take some time.
“Lyft cannot comply with the injunction at the flip of a switch,” Green said in a Wednesday analyst call.
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Wall Street viewed Lyft’s results with mixed sentiments. Wedbush analyst Dan Ives lowered his price target for the shares to $37 from $48, noting that July and early August trends point to a weak third quarter. Cost-cutting improved Lyft’s efforts to reach profitability, but California shutdown risks and challenged demand will see performance falter before fully recovering, Ives said.
On the other side of the spectrum, Morgan Stanley lifted their price target to $34 per share from $31. A suspension in California could eventually benefit Lyft, the bank said, as it could give rideshare companies data for lobbying in favor of California Proposition 22. The initiative, if enacted, would allow rideshare companies to classify drivers as contractors.
Second-quarter ridership data points to a steady rebound for Lyft’s core business, Morgan Stanley added.
“Similar to Uber, the pace of rides recovery for Lyft remains choppy, localized, but mostly better than expected,” analyst Brian Nowak said. “Also like Uber, Lyft’s cost cutting initiatives are yielding immediate benefits.”
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