Lyft Shares Shaking Off Pandemic Gloom After Strong Results
Lyft Shares Shaking Off Pandemic Gloom After Strong Results
(Bloomberg) -- Lyft Inc. shares are poised to break out of a recent pattern of lackluster performance after third-quarter results showed the ride-hailing company set for a much stronger recovery than expected.
The stock jumped as much as 15% in New York on Wednesday, the most since November last year, after dropping for five straight weeks. Peer Uber Technologies Inc. also rose, gaining 5.9%, as Wall Street analysts lauded Lyft for “astutely” navigating the challenges of the industry through the pandemic. Uber is set to report on Thursday.
Ride-hailing was among the hard-hit sectors during the Covid-19 outbreak as people shunned activities that involved coming in close proximity with strangers.
But rising vaccination rates and the economy’s reopening are re-igniting rider demand. Lyft said it was seeing a rise in airport rides, and weekend and evening trips -- a sign that customers are resuming their pre-pandemic habits.
“The driver shortage fears heading into this print were reaching a feverish pitch but yet Lyft was able to overcome with demand rebounding and good momentum heading into 2022,” Wedbush analyst Daniel Ives wrote in a note.
Investor concerns about an acute shortage of drivers for both Lyft and Uber, and its impact on the two companies’ results, had weighed on both stocks over the past month, with Lyft retreating 18% and Uber declining 8.8% through Tuesday’s close. The S&P 500 Index gained 6.3% over the same period.
While Tuesday’s report may help alleviate some worries, analysts warned that uncertainties remain on demand and ongoing labor issues.
Still, “Lyft is positioned to emerge from the pandemic financially leaner with a richer product offering and a strong momentum to ride growth,” Truist Securities analyst Youssef Squali said.
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