Lyft, Inc.

LYFT Details

One of the Fastest Growing Transport Providers: Lyft, Inc. (NASDAQ: LYFT) provides on demand transport services to the riders, who books rides from the company’s platform. The company generates revenue from drivers who uses Lyft’s ridesharing marketplace. The revenue is derived from service fees and commissions paid by drivers for using the Company’s ridesharing marketplace to connect with riders to successfully complete a ride. LYFT’s offerings include an expanded set of transportation modes, such as access to a network of shared bikes and scooters for shorter rides, and first mile and last-mile legs of multimodal trip.

Q2FY19 Operational Highlights for the period ending 30 June 2019: Lyft, Inc. declared its second quarter results for FY19 wherein the company reported total revenue at $867.3 million, up 72% on y-o-y and net loss came in at $644.2 million as compared to a loss of $178.9 million in the previous corresponding period. The company reported total costs and expenses at $1.5 billion, including stock-based compensation expense of $293.2 million. Insurance costs, which are mandatory under TNC (a Transportation Network Company) and city regulations for ridesharing and bike and scooter rentals, stood at $384.8 million, of which $141.1 million was related to changes to insurance reserves, attributed to historical periods. This adverse development was largely attributable to historical auto losses that predate relationship with new third-party administrator for insurance claims. Cost of revenue came in at $630.13 million as compared to $293.18 million, accounted for 72.7% of the total revenue. Research and development stood at $309.83 million as compared to $64.41 million in Q2FY18, accounted for 35.8% of the total revenue. Cash and cash equivalents stood at $417.39 million and total assets at $5,704.47 million as on 30 June 2019. The business reported Active Riders at 21.8 million as compared to 15.5 million on pcp terms, depicting a growth rate of 41.1% on pcp, aided by wider market adoption of ridesharing in addition to the company’s initiatives to attract and retain riders. Revenue per Active Rider during the second quarter of FY19 came in at $39.77 as compared to $32.67 during the previous corresponding period, driven by increased service fees and commissions including, efficiencies from Shared Rides, greater efficiency and effectiveness of driver incentives.


Q2FY19 Financial Highlights (Source: Company Reports)

Outlook: As per the management guidance, the future capital requirements will depend on several factors, such as the ability to attract and retain drivers and riders on the platform; acceptance of the service offered by the company, etc. The Company will further invest in operations and support, and R&D to ensure that LYFT continues to provide exceptional support to the users of its platform.

Stock Recommendations: The stock of LYFT is trading a $39.485 with a market capitalization of $11.56 billion as on 11 October 2019. The 52-week trading range of the stock stands at $37.07 to $88.6 and currently, the stock is trading at the lower band of its 52-week trading range. LYFT is one of the largest and fastest-growing multimodal transportation networks in the United States and Canada that offers access to a variety of transportation options through the platform and mobile-based applications. The Company delivered six-months’ contribution margin at 47.7% from 39.1% during the previous corresponding period while for the same period, the business delivered adjusted EBITDA margin of -25.6%, witnessing an improvement from H1FY18 margin of -47.6%. Considering the aforesaid facts, stock price movement, business prospects, and improved margins, etc., we recommend a “Buy” rating on the stock at the current market price of $39.485, up 4.73% as on 11 October 2019.

 
 LYFT Daily Technical Chart (Source: Thomson Reuters)

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