Lyft, Inc.

 

LYFT Details

Improved FY19 Guidance to Aid Business Prospect:  Lyft, Inc. (NASDAQ: LYFT) offers affordable, reliable and sustainable transportation ridesharingservicesthrough a marketplace connecting drivers and passengers.

Q3FY19 Financial Highlights for the Period ended 30 September 2019: LYFT announced its quarterly results for the financial year 2019, wherein the company reported revenue of $955.6 million as compared to $585.0 million in Q3FY18, up 63% on y-o-y basis. Net loss for Q3FY19 came in at $463.5 million as compared to a net loss of $249.2 million in the previous corresponding quarter, on account of stock-based compensation and related payroll tax expenses, primarily due to RSU (Restricted Stock Units) expense recognition.The business also incurred a $86.6 million expense related to changes to the liabilities for the insurance required by regulatory agencies attributable to historical periods. The company reported an adjusted EBITDA loss of $128.1 million as compared to $263.2 million in the previous corresponding quarter. During the quarter, the company reported the contribution of $479.2 million as compared to $263.2 million in Q3FY18, up 82% on pcp basis, while contribution margin increased to 50.1% from 45% in Q3FY18. Active riders came in at 22.31 million, up 28% on y-o-y basis. Revenue per active rider came in at $42.82, up from $33.63 in Q3FY18. The company reported higher research and development expense at $288.272 million as compared to $77.168 million as the business continued to invest heavily in research and development to introduce new innovations on its platform.
 

Q3FY19 Income Statement Highlights (Source: Company Reports)
 
Outlook: As per Q4FY19 guidance, the company expects revenue between $975 million and $985 million, depicting an expected growth range of 46% - 47% on pcp terms. The company lowered its EBITDA loss guidance range to $160 million - $170 million, as compared to the previous guidance of $240 million and $245 million. Annual revenue is expected to be between $3.57 billion and $3.58 billion, representing a growth range of 61% - 62%. For FY19, the company expects to report an EBITDA loss in the range of $708 million - $718 million. The business is now looking forward to invest in the expansion of its scooter network and the autonomous vehicle technology.
 
Valuation Methodology: EV/ Sales Multiple Approach
 

EV/ Sales Based Valuation (Source: Thomson Reuters), *NTM: Next Twelve Months
 
Stock Recommendation:On December 10, 2019, the stock of LYFT closed at $45.26 with a market capitalization of ~$13.473 billion. The stock is quoting at the lower band of its 52-week trading range of $37.07 to $88.60. The stock has delivered a negative return of 22.06% in the last six months and a positive return of 4.69% in the last one month. The company reported record revenue during the third quarter of FY19 aided by strong growth in both active riders and revenue per active rider. LYFT continues to increase its engagement through product innovation and execution, which is expected to drive growth in the coming quarters. LYFT also invested in sales and marketing in order to cultivate a differentiated brand that resonates with drivers and riders and enhance brand awareness. Together, these investments have enabled LYFT to create a powerful platform and scaled user network that has resulted in rapid growth. Considering the aforesaid facts, we have valued the stock using one relative valuation method, i.e., EV/Sales methodology and arrived at a target price depicting double-digit upside (in % terms). Looking at the current trading levels, improved EBITDA guidance, record quarterly revenue, price movement and valuation, we recommend a ‘Buy’ rating on the stock at the current market price of $45.26, down 0.35% as on 10 December 2019.
 
LYFT Daily Technical Chart (Source: Thomson Reuters)

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