Lyft, Inc.

 

LYFT Details
 
Improved Guidance Driven by Higher Revenue Per User:Lyft, Inc. (NASDAQ: LYFT) provides transportation services through affordable rental car facilities to the riders and has more than 30 million riders and 2 million drivers on its platform.
 
Q3FY19 Operational Updates for the Period ended 30 September 2019:LYFT declared its quarterly results, wherein the company reported revenue of $955.6 million, up 63% on y-o-y basis. Active Riders stood at 22.314 million as compared to 17.391 million in the previous corresponding quarter, depicting a growth of 28% on y-o-y basis. The business reported revenue per active rider at $42.82, up 27% on y-o-y basis. LYFT witnessed a net loss of $463.5 million as compared to a net loss of $249.2 million in Q3FY18, due to the inclusion of stock-based compensation of $246.1 million and related payroll tax expenses, followed by $86.6 million pertaining to changes to the liabilities for insurance required by regulatory agencies attributable to historical periods. The company reported an increase of $211.1 million in research and development expenses, representing an increase of 274% from Q3FY18, on account of an increase in stock-based compensation expense driven by expenses associated with Restricted Stock Units (RSUs), which the company started to recognize upon the effectiveness of the IPO Registration Statement. The company reported an increase of $39.6 million in other personnel-related expenses due to an increase in headcount associated with research and development activities. The company reported cash and cash equivalents of $543.871 million, total assets of $5,735.161 million and total stockholders’ equity at $2,989.514 million as on 30 September 2019.


Q3FY19 Income Statement Highlights (Source: Company Reports)
 
Outlook:As per the Management guidance, the company expects Q4FY19 revenue to be in the range of $975 million to $985 million, depicting growth between 46% and 47% on y-o-y basis. LYFT is expecting an adjusted EBITDA loss within $160 million to $170 million, representing an upgrade from the earlier guidance of $240 million to $245 million. Full year revenue is expected between $3.57 billion and $3.58 billion, depicting a growth of ~66% on the previous financial year. The revenue guidance has been upgraded from the previously expected revenue range of $3.47 billion to $3.50 billion.
 
Valuation Methodology: Enterprise Value to Sales Multiple Approach

Enterprise Value to Sales Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

 Stock Recommendation: The stock is quoting at $46.83 with a market capitalization of ~$13.94 billion. Currently, the stock is trading at the lower band of its 52-week trading range of $37.07 to $88.60. Q3FY19 results showed substantial progress towards bottom-line improvement. The company recorded strong revenue growth aided by growth across active riders and revenue per active rider. The business continues to focus on increasing its engagement with customers through product innovation and implementation. The business is witnessing meaningful improvements in monetization and strong operating leverage through its transportation activity and has upgraded its outlook for Q4FY19 and FY19.Considering the current trading levels, improved guidance, increase in average revenue per user, and business prospects, we have valued the stock using one relative valuation method, i.e., Enterprise Value to Sales multiple and arrived at a target price of lower double-digit upside (in percentage terms). Hence, we recommend a ‘Buy’ rating on the stock at the current market price of $46.83, down 0.53% as on 16^th January 2020.
 
 
LYFT Daily Price Chart (Source: Thomson Reuters)

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