Lyft Results to Be Scoured for Market Share Clues

(Bloomberg) -- It’s turning into a trying week for Lyft Inc. investors, with the company’s first quarterly report as a public company due post-market on Tuesday and bigger rival Uber Technologies Inc.’s long-awaited initial public offering expected to price on Thursday.

Coming just over a month after Lyft’s IPO, which attracted criticism for potentially over-hyping the company’s prospects, these initial results will be parsed closely by investors looking for clues into how the ride-sharing service plans to tackle its biggest challenges, including becoming profitable, staying on an aggressive growth path and competing with the larger Uber.

“I think investors are probably willing to give Lyft a bit of a pass on profitability and showing meaningful progress on margins, but what the Street wants to see is continued strong revenue growth trajectory,” D.A. Davidson & Co analyst Thomas White said in a phone interview. “We think revenue growth is going to remain quite healthy, driven by continued market share gains by Lyft.”

Apart from revenue, profit and margins, analysts will also be closely looking at the so-called take-rate -- revenue as a percentage of the total value of bookings or rides, and the number of active riders on the platform. In its regulatory filing ahead of the IPO, Lyft said it had 18.6 million active riders for the quarter ended December 31, 2018, and more than 1.1 million drivers.

“We forecast active riders of 19.7 million, up 40 percent year over year and up 1.13 million quarter over quarter, largely driven by increased penetration as well as geographic expansion, and helped by additional publicity leading up to March IPO,” Cowen analyst John Blackledge wrote in a note dated May 3. The analyst estimated revenue per rider to be around $37.80, up 34 percent from a year ago, helped by more frequent use of ride-sharing services by users, higher service fees and commissions and improved efficiency of driver incentives.

Lyft’s results would also provide a clearer picture of the entire ride-sharing industry, and analysts are keen to see if any signs of rationalization emerge, after a long period of tough price wars and promotions.

“It may take a quarter or two for investors to be comfortable with market rationalization, but we believe Lyft’s multiple will expand when that occurs; a rational market lessens competitive fears and makes lapping 2018’s tough comps easier,” Raymond James analyst Justin Patterson wrote in a note.

Lyft’s share price has now fallen nearly 18 percent since its trading debut in late March, bringing its market capitalization to just under $17 billion. By comparison, Uber’s market value is expected to reach about $84 billion.

“We believe many investors have taken a wait and see approach, and not putting real money to work in Lyft but rather waiting; 1) to see what investor reaction to Uber’s IPO will be, and; 2) for Lyft to report its first quarter as a public company,” Wedbush analyst Daniel Ives wrote in a note. Shares of the company dropped as much as 2.5 percent on Tuesday, ahead of the results port-market.

What Bloomberg Intelligence Says

“Lyft’s share of the U.S. ride-sharing market, along with its Ebitda margin, will likely be a focus on its first earnings call on May 7. Based on Uber’s financials, we believe Lyft’s share is closer to 30 percent versus the 39 percent it gave in its S-1 filings. High insurance and operations costs will remain a drag on Lyft’s Ebitda margin, which was minus-44 percent in 2018, and the company will seek to offset it with lower sales and marketing expenses. Still, Lyft’s top-line growth metrics, such as rides and bookings, should remain strong amid increasing use of ride sharing across a large smartphone user base, in our view.”
-- Mandeep Singh, technology analyst

Just the numbers

  • 1Q adjusted loss per share estimate $10.53 (range loss $7.93 to loss $14.14)
    • Based on pre-IPO share count in the range of 21-22 million shares
  • 1Q revenue estimate $738.5m ($693m-$767m)
  • 1Q adjusted Ebitda loss estimate $276.1m (loss $239m to loss $364m)

Data

  • LYFT 15 buys, 8 holds, 2 sells; avg PT $74: Bloomberg data
  • Implied 1-day share move following earnings: 11%

Timing

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