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Stock Analyst Update

Lyft Reported Strong Q1 Results, Raising FVE

Demand for its ridehailing service continues to improve, indicated by a strong sequential increase in and steady monetization of riders.

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Lyft’s (LYFT) first-quarter top- and bottom-line results came in better than the FactSet consensus estimates as demand for its ridehailing service continues to improve, indicated by a strong sequential increase in and steady monetization of riders. Combined with a slower recovery in supply, the increase in demand pushed prices much higher, further contributing to better-than-expected first-quarter net revenue. We think as supply increases prices likely will stabilize and come down in the second half of this year. Until then, Lyft and likely its peer, Uber, will continue to benefit from higher prices. Lyft management’s second-quarter net revenue guidance was higher than our internal projections. The firm also guided for adjusted EBITDA profitability beginning in the third quarter. We still expect full-year adjusted EBITDA profit in 2022 and GAAP profitability in 2024. 

After adjusting our model, we have increased our fair value estimate slightly to $61 from $59. This narrow-moat stock continues to trade in 3-star territory. In our view, Uber is a more attractive investment as it is trading at a 21% discount to our $67 fair value estimate. We think Lyft’s strong numbers, especially on the demand side, also bode well for Uber. 

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Ali Mogharabi does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.